coin of the realm (1888)
TRANSCRIPT
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COIN OF THE REALM: WHAT IS IT?OB,
TALKS ABOUT GOLD AND SILVER COINS.
WITH A FEW PEAOTICAL LESSONS
BASED ON
"NOEMAN'S SINGLE GRAIN SYSTEM"{Written expressly for Boys and Girls)
BY
EMILY CEUWYS SHAELAND.
ALSO, AS AN
APPENDIX,AN EXCHANGE CALCULUS, FIVE PAPEES, AND A MEMORANDUM ON
MONEY, WITH VALUABLE AND ORIGINAL TABLES,
JOHN HENEY NOEMAN
PRICE TWO SHILLINGS. ,
LONDON: \x
WATERLOW & SONS LIMITED, LONDON WALL.
1888.
[Entered at Stationer)' Mall.—All rightt reserved.']
Digitized by the Internet Archive
in 2007 with funding from
Microsoft Corporation
http://www.archive.org/details/coinofrealmwhatiOOsharuoft
EXTRACTS OF LETTERS RECEIVED BY
MR. NORMAN, IN COMMENDATION OF
MISS SHARLAND'S AND HIS WORK.
From the Hon. H. R. Linderman, Director of Mints, U.S.A.,
May 25th, 1875.
"The receipt of your favour of the 13th instant was a great
pleasure to me. I had read with much interest the valuable tables
in reference to weights of coins, exchanges, &c. , received from you in
the early part of the year. It is, I think, to be regretted that the
statistics, &c, contained in those tables could not be placed more
generally before the public. There appears to be a wide-spread
ignorance, or disregard of the fundamental principle which under-
lies international exchanges, and hence the value of contributions
bike yours, in which the principle referred to (pure metal against
pure metal) is so clearly stated."
From Professor Dr. A. Soetbeer, Gottingen, May \§th, 1887.
" I am very much obliged to you for the printed matter you
kindly sent me, i.e., ' Single Grain System.' I have taken notice
of them with great interest."
Extract from The Bankers' Magazine, June, 1887.
" Everyone should be encouraged to work out the system,
especially the young, for the information may prove of much value
to them in going through the world."
From Professor Erwin Nasse, Bonn, June 4th, 1888.
14 1 have read with great interest the pamphlet you were kind
enough to send me. Your method of comparing the weights of
fine gold and silver contained in the coins of different countries has
pleased me very much."
IV
From H. J. Chaney, Esq., Keeper of the Standards of Great Britain,
June 27th, 1888.
" The answers given by the children to the questions on money
asked by Miss Sharland are really surprising, for they evince
powers of mind and application which could hardly be expected in
children so young. The success has its origin in the able chapters
on money which Miss Sharland had prepared for the children.
In these chapters the actual relation between the standard of
monetary measure in different countries is based on the simple
unit, a grain of standard substance ; and so all the technical over-
loading, always met with in the literature of this subject, is quite
swept away. The child has only a simple factor before him,
and by successive gentle steps he has been taught to apply that
factor to unravelling so many knotty problems in exchange and
value. It has given me very great pleasure to read papers which
you have sent me, and I shall be glad at any time to receive further
information on the important and interesting question of monetary
values."
From F. H. Skniob, Esq., September 8th, 1888.
" I am sure every one who has read Miss Sharland's papers
must have been very greatly pleased and owes his best thanks to
her for the admirable exposition of your system."
From Professor Dr. W. Lexis, Gottingen, September 17th, 1888.
f1. 1 think that your ' Single Grain System ' is most useful for all
practical purposes, and simplifies very much the whole exchange
calculus."
From Alex. L. Glencross, Esq., September 28th, 1888.
'* Miss Sharland's chapters on " Money " are most instructive
and most ingenious. They cannot fail, I am sure, to make boys
and girls not only take an interest in but to make a hobby of
the subject."
COIN OF THE EEALM: WHAT IS IT?
''
—
&**-*<ytj3&*1p tyrt&r***. ///
etricatetr im IBermisaton
TO
MRS. FAWOETT.
PREFACE.
"jITANY persons are fond of collecting coins. They spare no-L'-L pains in hunting up the history of every fresh specimen
that they are fortunate enough to add to their collection ; and
a most interesting and instructive form of amusement this is.
But so few collectors of coins carry their researches up to the
present date ! so very few persons know anything concerning
the coinage of their own day beyond its shopping value.
I hope to induce my young readers to confess, after reading
the following pages, that " Money " is not so dry a subject as
they have hitherto believed it to be ; and I feel sure that
among the great number of boys and girls who nowadays
delight in mastering difficult arithmetical problems, some will
be found who will enjoy the practical application of Mr. J. H.
Norman's Single Grain System, fully explained in the second
series of this work.
It is strange that almost all authors of geographies describe
the religion, language, physical conditions, products, and
manufactures of the countries about which they write ; whilst
the history of the standard and token coins circulated in those
countries has hitherto been omitted. The addition of this
latter subject would prove of great value to all students in-
tending to follow a commercial career, or to travel in foreign
lands ; and I trust that some day the monetary systems of
the countries that possess a standard currency will be taught
in schools with geography
.
8 COIN OF THE REALM
On the valueof coins.
John Smithgives their
exchangevalue.
Miss Sweet is
asked to
define money.
* There are only two kinds of gold coins used in England
now," said John ;* the sovereign, or pound, which is worth
twenty shillings, and the half-sovereign worth ten shillings.
Bank notes and cheques are used for large sums of money. Aman can carry thousands of pounds at a time in his pocket if he
use these."
" That's true enough," I answered, " and there are a great
many other kinds of paper money in use besides bank notes and
cheques.—But just now we are talking about coins. You are a
ready reckoner I know, John;your father tells me that you are
a great help to him on busy evenings. Suppose you give me an
idea of the value of the different coins you named, by telling
me some of the things that could be bought with them at your
father's shop."
"All right," said John. " Let me see; 1 want to bring in
a farthing first, don't 1 1 Oh, well ! you can get a farthing reel
of cotton, or a farthing row of pins. Then potatoes are ^d. a
pound just now, or lOd. a score. A sixpenny and a threepenny
bit—9d. in all—will get you 6 lbs. of flour. One shilling is the
price of a £ lb. of the best shag tobacco. A two-shilling piece
will buy 1 lb. of tea, though our half-crown article is better. Ahalf-sovereign was the price of my last new trousers ; whilst a
whole sovereign, or £1, would, I believe, buy a coat for father."
"Well done, John," said I, laughing. ''You have been
quick about it, and you have reckoned it all capitally, I must
say. But what more can you tell me about money?"" What more 1 " repeated John. " What more do you want ?
There's nothing more to tell."
" Nothing more to tell, John ? " cried I, turning up my eyes,
and throwing up my hands. "I am afraid you must be very
ignorant to say so !
"
" John's face turned very red, for he was a clever boy, and
my last remark wounded his pride greatly. But he was a
thoroughly good fellow, and the next minute he looked into myface with a roguish smile.
" Ah, Miss Sweet," said he, " you are at your old tricks again,
/know! That's always your way of going on when you want
to tell me something jolly and interesting. Come ! let's hear
what you've got to tell about money, now that I've had mysay."
WHAT IS IT r 9
"It would take a longer time to tell than I can stand here
talking, John," I answered j" but if you will drink tea with me
next Saturday evening, we will sit over the fire afterwards, and
have a talk about the history of money. If you find that you
would like to hear more about it, why, you must come to tea
again, that's all."
So that was how young John Smith came to know so much This leads to
about money. Many a cosy tea and chat did we two have J^^Ttogether that winter, until John knew as much about the subject tiona.
as I could tell him.
In the following chapters I hope to give my readers those
particulars concerning money which proved of so much interest
to John Smith.
Chapter I.
I suppose everybody values money; but if you could get
each of your friends to tell you truly why they like to possess
pounds, shillings, and pence, you would be quite surprised to
discover what a variety of reasons people would be able to give
for doing so. Children, I am glad to say, generally value
money for its true worth, and that is, for what it will get. I do
not mean to sav that vou young people are to be depended On the value
i i
,
• xl v i • * of money,upon to spend your money always in the best ana wisest way
;
on the contrary, a present of money often burns a hole in a
girl's or boy's pocket—you cannot be happy until you have
spent it. For this reason it is a very good thing that you
are not likely to possess much money until you have learnt to
keep it for real wants, and not to spend it simply because you
have it. Yet you do value it, I am sure, for what it will buy
rather than for its own sake. It is a very rare thing for
either of you to put by your little presents of money just for
the pleasure of looking at them. At times poor miserly men
and women have thus most sadly misused the money they have
earned, depriving themselves of all the comforts of life, and of
many of its necessities also, for the sake of keeping their poor
little coins in a secret place, and counting them over when no
one was by. Could anything be more pitiable than this ?
To appreciate the real value of money, you must go back Exchange or
barter.
8 COIN OF THE REALM
On the valueof coins.
John Smithgives their
exchangevalue.
Miss Sweet is
asked to
define money.
" There are only two kinds of gold coins used in England
now," said John ;" the sovereign, or pound, which is worth
twenty shillings, and the half-sovereign worth ten shillings.
Bank notes and cheques are used for large sums of money. Aman can carry thousands of pounds at a time in his pocket if he
use these."
" That's true enough," I answered, u and there are a great
many other kinds of paper money in use besides bank notes and
cheques.—But just now we are talking about coins. You are a
ready reckoner I know, John;your father tells me that you are
a great help to him on busy evenings. Suppose you give me an
idea of the value of the different coins you named, by telling
me some of the things that could be bought with them at your
father's shop."
"All right," said John. " Let me see; 1 want to bring in
a farthing first, don't I % Oh, well ! you can get a farthing reel
of cotton, or a farthing row of pins. Then potatoes are ^d. a
pound just now, or lOd. a score. A sixpenny and a threepenny
bit—9d. in all—will get you 6 lbs. of flour. One shilling is the
price of a \ lb. of the best shag tobacco. A two-shilling piece
will buy 1 lb. of tea, though our half-crown article is better. Ahalf-sovereign was the price of my last new trousers ; whilst a
whole sovereign, or £1, would, I believe, buy a coat for father."
"Well done, John," said I, laughing. "You have been
quick about it, and you have reckoned it all capitally, I must
say. But what more can you tell me about money 1"
" What more 1 " repeated John. " What more do you want ?
There's nothing more to tell."
" Nothing more to tell, John ? " cried I, turning up my eyes,
and throwing up my hands. "I am afraid you must be very
ignorant to say so!
"
" John's face turned very red, for he was a clever boy, and
my last remark wounded his pride greatly. But he was a
thoroughly good fellow, and the next minute he looked into myface with a roguish smile.
" Ah, Miss Sweet," said he, " you are at your old tricks again,
/know! That's always your way of going on when you want
to tell me something jolly and interesting. Come ! let's hear
what you've got to tell about money, now that I've had mysay."
WHAT IS IT P 9
'
' It would take a longer time to tell than I can stand here
talking, John," I answered ; " but if you will drink tea with menext Saturday evening, we will sit over the fire afterwards, and
have a talk about the history of money. If you find that you
would like to hear more about it, why, you must come to tea
again, that's all."
So that was how young John Smith came to know so much This leads to
about money. Many a cosy tea and chat did we two have
together that winter, until John knew as much about the subject tions.
as I could tell him.
In the following chapters I hope to give my readers those
particulars concerning money which proved of so much interest
to John Smith.
a series ot
conversa-
Chapter I.
I suppose everybody values money; but if you could get
each of your friends to tell you truly why they like to possess
pounds, shillings, and pence, you would be quite surprised to
discover what a variety of reasons people would be able to give
for doing so. Children, I am glad to say, generally value
money for its true worth, and that is, for what it will get. I do
not mean to say that you young people are to be depended On the value
upon to spend your money always in the best and wisest way;
on the contrary, a present of money often burns a hole in a
girl's or boy's pocket—you cannot be happy until you have
spent it. For this reason it is a very good thing that you
are not likely to possess much money until you have learnt to
keep it for real wants, and not to spend it simply because you
have it. Yet you do value it, I am sure, for what it will buy
rather than for its own sake. It is a very rare thing for
either of you to put by your little presents of money just for
the pleasure of looking at them. At times poor miserly menand women have thus most sadly misused the money they have
earned, depriving themselves of all the comforts of life, and of
many of its necessities also, for the sake of keeping their poor
little coins in a secret place, and counting them over when no
one was by. Could anything be more pitiable than this ?
To appreciate the real value of money, you must go back Exchange or
barter.
10 COIN OF THE RE-ALJI:
The difficulty
of establish-
ing a fair
system of
exchange.
with rue many hundreds of years, and try to imagine how our
forefathers lived before money had been invented. How do
you suppose men managed to buy and sell in those days, whenthey had no money to part with, and their neighbours also had
none to offer them ? They used to exchange things that they did
not want, for things that they did want. Suppose a man had a
flock of sheep, but no corn, he would give a sheep, or part of one,
for so many measures of corn. This way of exchanging goods
was called barter or truck (from the French, troc), and I suspect
that men tried to overreach their neighbours, even in those
early times, by asking them to accept worthless things in return
for valuable ones, because the word truck is now a commonexpression of contempt in Devonshire : "I don't want any of
your truck /" a Devonshire man will say if he is offered any-
thing that he considers rubbishy.
But the worst of this sort of trading was the difficulty of
establishing a proper ratio of exchange—that is, to determine
what number of articles of one description should be considered
equivalent to a certain number of articles of another description.
Suppose, for instance, that your mother wanted 2 lbs. of
flour, 1 lb. of treacle, and half-a-dozen eggs, and that she had
nothing to offer for these things but a pair of new boots : don't
you think it would be difficult to arrange matters to her satis-
faction? The new boots, perhaps, might be worth 10s., whilst
2 lbs. of flour would cost 3d. ; 1 lb. of treacle, 2£d ; and half-a-
dozen eggs, 6£d. Well;your mother would either have to
carry home a lot of other things she was not in immediate
want of, or else she would lose the value of 9s. 0}d. by parting
with her boots.
But in the early times of which I am writing there were no
shops or stores. These exchanges had to be made between
private persons, and were even more difficult to arrange fairly.
If Mrs. Jones were to go to Mr. Brown, just after he had killed
a sheep, and were to say, " I am in want of a joint of meat large
enough for a family of seven, and can offer you in exchange for
it my best bonnet ;" most likely Mr. Brown would reply, " I am
sorry I cannot oblige you, Mrs. Jones, but, as I am a baehelor,
your best bonnet would be of no use to me !" You will readily
understand that this plan did not answer in olden times any
better than it would do so now. People often had not suitable
WHAT IS IT? 11
things of the same value to offer in exchange for what they
wanted, and house-keeping must have been far more difficult to
manage in the days when there was little or no money in cir-
culation than it is now.
Hunting is one of the earliest forms of industrial employ- Furs
ment of which we have any trace, and furs or skins were
certainly circulated as money by many ancient nations. I dare-
say you will be surprised at my classing hunting amongst the
industries, but I do so because in ancient times men hunted and
killed wild animals for the sake of providing food and clothing
for themselves and their families, and not for idle pleasure.
The flesh of the beasts they killed was their food, and the skins
were their clothing by night and by day. Men who were
clever at hunting, however, very soon laid in a much larger
supply of skins than they could possibly require for themselves
and their own families ; therefore they parted with them for
other things of which they were in need, and in time skins
became the regular medium of exchange amongst the hunting
tribes. In some parts of the world they are used thus still.
When men became more civilised, and took to cultivating land, Cattle.
and keeping flocks and herds of sheep and cattle, a man's live
stock became his money. It will interest many of you to know that q- f f
the word fee is derived from the Anglo-Saxon word feoh, which capital, chattlr
meant either money or cattle ; and another fact worth men- cattle
tioning to you is, that the kine used for exchange purposes,
being counted by the head, were named capitate (a word derived
from the Latin word caput, head) and from it our English terms
capital, chattel, and cattle had their origin.
I daresay it was convenient enough in the days when there
were no shops, to possess money which walked about upon its
own legs, and could be easily driven from one piece of pasture
land to another ; but a cow or a sheep would be rather a
cumbersome piece of money in these days, would it not ? Just
imagine the confusion and commotion that would take place in
a town of any size on market day, if all the countryfolk brought
their sheep, or cattle, or pigs into the town with them, and left
them at the shops in exchange for the articles of food and
clothing that they required ! It is bad enough sometimes even
now when cattle are driven through the streets of a town to and
from the market place ; but then, as soon as market is over^
12 COIN OF THE REALM
Ornaments
.
Leathermoney.
Coins.
they are driven out of the town again—not left behind to be
accommodated in some tradesman's backyard or garden.
The love of finery has shown itself in all ages, though there
have always been, and still are, varieties of opinions as to
whether the things worn are ornamental or disfiguring to the
wearers. For instance, those who imagine that they look lovely
in war paint and feathers, with rings through their noses, and
tobacco pipes stuck through their ears, appear to us to have
rather peculiar ideas on the subject of becoming ornaments, do
they not ?
At an early stage in the history of money, we find that menand women took to adorning themselves with the things which
they were in the habit of exchanging for the necessaries of life.
I will tell you some of the odd things which from time to time
have been used for this double purpose by the different nations
of the world :—Black and white polished shells, made into
beads ; cowries, (the shells best known as black-a-moors' teeth)
;
whales' teeth ; ivory tusks; yellow amber ; leather money*;
and metal coins.
Eastern women adorn their head-dresses to this day with
small silver coins, and in India the natives often melt down
* Classical writings lead one to suspect that the earliest currency usedat Rome, Lacedaemon, and Carthage was formed of leather. Leather moneyis also said to have heen circulated in Russia as late as the reign of Peterthe Great, whilst English tradesmen's token-money was prohably made of
stamped leather at one period. [Since writing these chapters, I have receivedthe following interesting account of a modern leather medal from a youngco-operator, in his description of how the Queen's Jubilee was kept at
Barnsley, in Yorkshire :—" The cordwainers exhibited a novelty often heard
of hut seldom seen—a leather medal. I had the pleasure of seeing one of
them the day before they were worn. On one side were these words :
—
1 Barnsley Cordwainers' Society, established 1747. In commemoration of
Her Majesty's Jubilee, June 21st, 1887.' The medal was ciroular, the wordsbeing stamped round a gilded crown."
The following newspaper cutting has also been contributed by anotheryoung co-operator :
—
Cuhious Money.—The battle of Poictiers took place on the 19th of
September, 1356, in which King John of Prance was made prisoner, andmany of the French nobility li st their lives. The c iptive monarch, thoughrespectfully treated, was brought to England to grace the triumph of theconqueror. The peace, in 1360, put an end to his captivity, but to obtainhis liberty he made over many of the most valuable provinces of his king-dom to the King of England, and agreed to pay a ransom of three millionsof gold crowns, which reduced him to the necessity of paying for thenecessaries of his household in leather money, in the middle of which therewas a little nail of silver.
WHAT is it: 13
their silver money, form it into bracelets or bangles, and wear
these upon their wrists or ankles, thus becoming a kind of
walking savings bank. But, as their money gains no interest
when treated thus, I do not advise any of you to adopt either of
these plans.
Suppose English women took to trimming their bonnets and
caps with silver money, and used these ornamental coins when-
ever they required to buy anything : how untidy they would
soon be ! They would be returning from their shopping
expeditions with a coin or two missing from their bonnets, or
perhaps with only one earring on. I do not think we should
like that style of thing at all in old England !
Corn has been used as a medium of exchange for many
centuries past, and is still so employed in some parts of Europe.
In Norway it is even deposited in banks, and lent and borrowed.
A good many other vegetable productions have been used from
time to time for exchange purposes, such as maize, olive oil,
cacao nuts and beans, and tobacco. In the beginning of the
17th century tobacco was ordered to bo received in the Virginia
plantations instead of money, at the rate of 3s. per lb. Whatdo you think was the use made of this permission by the settlers
in Virginia ! They actually bought wives for themselves at the
rate of from 100 lbs. to 150 lbs. of tobacco per wife ! I only
hope that you all think your mothers are worth more than £15
or £22. 10s. apiece
!
And now let us turn our attention to the origin of metal
money, though I must not let my pen run on too long about
the earlier coinage of our own and other nations, for it "would
be quite impossible to give you a complete history of coins in
these short chapters. But I strongly advise those of you whoare within reach of a museum containing a collection of coins,
to go and have a good look at them, not once, but many times,
and to read about them as well. Some holiday time you might
do this, and, I think, you would be rewarded for your pains.
Metal money is of very ancient origin. You must not
imagine that at the time when furs, or cattle, or corn, or orna-
ments were being used as mediums of exchange, there were no
coins in circulation. They were certainly in use then, but until
the metallic mines had been worked for many centuries it wouldhave been impossible to provide whole nations with an unlimited
Core.
Othervegetableproductions.
Tobacco.
The origin of
metal money.
14 COIN OF THE REALM
:
[nventedabout 900 it o.
Ancient coins
stamped withseals.
Different
kinds of
metal used
.
Primitive
forms of
metalmoney.
Rough lumps
Gold dust.
Bars or
spikes.
supply of metal for coinage ; besides which, every fresh inven-
tion takes a long time making its way in the world. Had Mrs.
Brown been living in the days when coins were scarce in
England, she would have thankfully exchanged away her fire
irons, her spare bed, her best tea things—yes, and even her
party frock I—if by so doing she could have kept the few
precious little coins she had managed to get hold of. But
now-a-days if Mrs. Brown wishes to be thought respectable
amongst her neighbours, she will spend her last shilling before
she will part with so much as a pair of sugar tongs in order to
supply the family needs. Mrs. Brown is quite right, mind you,
and the people who lived generations before her were quite
right too. They all showed themselves willing to give up their
old habits of exchange and barter when a new and better mediumof exchange was provided for them. This is what is called
moving with the times, and it is only unselfish people who are
willing to resign cherished customs and manners of living for
the sake of bettering those who will come after them.
It has been pretty certainly proved that metal coins were
invented about 900 B.C., and that silver money was in use a
century later. The earliest specimens of silver coins are found
stamped on one side only, the reason for which is supposed to
be as follows : Seals were used at a very early date by persons
in authority, and it is thought that some ruler of the land made
the impression of his seal upon each coin to certify that it was
of true weight.
All these metals—gold, silver, copper, tin, lead, and iron,
were used as money in every age of which we have any historical
account ; but they were not manufactured into coins and stamped
from the very first, though the art of hammering metals into
various shapes was early invented.
Most of the metals were first circulated in rough lumps,
whilst the primitive form of gold money seems to have been gold
dust. All of them were bought and sold by weight against other
commodities ; so many grains of gold dust, for instance, for a
skin, a cow, or a measure of corn.
As soon as metals began to be moulded, iron, copper, and
brass appear to have been made into bars or spikes. The size
of these bars can be guessed at pretty nearly, for we are told
that six of them were as many as a man could grasp in one
WHAT 18 IT 'i 15
hand. They were made as nearly of one weight as possible,
and parted with by the tale or piece.
Is it not lucky that we have no such clumsy pieces of money
at the present day ? Even one, bar of iron stowed away in one's
pocket would be very uncomfortable, besides which, I don't
believe the ancients had any pockets. Perhaps they strapped a
bundle of these bars on to their backs when they went to visit
a neighbour for the purpose of buying anything of him.
Then, there was ring-money : in some countries men took to Ring-money,
melting their gold- dust or silver ore, and working it into thick
wire ; this they twisted into spiral rings, and probably wore
until they were obliged to exchange them away for other things.
You see, different nations adopted different fashions even in
those early ages : in some countries it was the fashion to wear
shell-money, in others silver coins, and we have certain proof
that gold and silver ring-money was worn in many countries of
the world at different periods of history. For my part, I should
not like to wear rings one day, and to have to part with them
the next, and I do not suppose that you would approve of this
plan of buying food and clothing, either.
I have already told you that iron bars were circulated as Iron,
money in ancient times ; Julius Csesar also mentioned in his
writings that he found the ancient Britons using iron rings of a
certain weight for money. But, although we have it on good
authority that these iron bars and rings were in circulation
formerly, not a single specimen of either has ever been dis-
covered. Can you guess the reason for this ? It is because
iron rusts very rapidly, which makes it a most unsuitable
material for coinage. Every bar or ring of iron belonging to
thoree early times must have been eaten away with rust manycenturies ago, so that it would be useless for antiquarians to dig
and delve in the hope of finding any. I believe specimens of
every other kind of metal money have been found and preserved.
Iron is so exceedingly cheap, also, that a penny would be pro-
perly represented by a pound weight of it
!
Lead has oftened been coined, but it is so soft that any Lead,
impression stamped upon it would very soon get worn away.
At one time leaden bullets were circulated in America as small
change, at the rate of a farthing a bullet ; and in Burmah lead
is accepted by weight for small payments.
It) COIN OF THE REALM :
How odd you would think it, if, when you laid down a penny
and asked for a halfpenny worth of sweets, a couple of bullets
were handed back to you for your change ! Or, worse again,
to give half-a-crown in payment for two shillings' worth of tea
and then to have the store manager weighing you out sixpenny-
worth of lead, and expecting you to carry it away instead of a
sixpenny bit
!
Tin. Tin was, no doubt, the first metal used for British coinage,
for there were tin mines in Cornwall at a very early date. Tin
is both lighter in weight and higher in price than iron, lead,
or copper ; but it is so soft that it is liable both to bend and to
break.
Picture the following scene : Tom Channing has had a
present of a tin shilling. How bright and large it is ! He is in
school now, but at twelve o'clock he means to go off and spend
his treasure. What will it get ? A real blood alley for one thing,
and perhaps a pocket knife with one blade ; anything left can
be spent at the tuck shop. Whilst Tom is thinking of all this,
he is supposed to be learning a lesson. His eyes are upon the
book in front of him, but his thoughts are far away from it, and
his left hand is in his left trousers pocket, turning the money
about, and squeezing one-half towards the other with bis hot and
sticky fingers. How easily it bends ! Tom shows the doubled-
up coin to his neighbour, holding it under the desk. " Whatare you doing, Channing ?" thunders the master; "you shall
bring me that pretty thing the very next time I catch you
looking at it !" and Tom feels that he has only just escaped
losing his shilling. By the time school is over, the coin has
been bent and unbent a good many times, so Tom then proceeds
to straighten it out before going off to spend it. Snap goes the
tin shilling in two ! Poor Tom need not trouble himself as to
what it will buy, for no shopman will accept his broken
bits of tin.
Copper Copper takes a good impression, and keeps its colour well
;
but it has one great drawback, namely, its excessive cheapness.
If a penny contained a real pennyworth of copper, it would
weigh nearly Ifoz. troy, that is, about six times the weight of
our present bronze penny. This would be almost as bad as the
leaden and iron money. During the last century copper money
was very much used in Sweden, and we are told that merchants
WHAT IS IT? 17
used to take wheelbarrows with them when they went to receive
payment for their merchandise !
A good deal of nickel is now made use of in the manufacture Nickel.
of foreign coins, but I believe it is always mixed with some
other metal. In Belgium, the United States, and Germany
many of the coins are made from a mixture of one part nickel
to three parts copper.
Brass—a mixture of copper and carbonate of zinc—was used Brass and
for coinage by the Romans ; and pewter has often been coined. p w
The finest pewter is, I believe, a compound of tin, antimony, and
copper, the last two being used in very small proportions; but
common pewter is merely a mixture of tin and leid.
When first platinum mines were discovered in the Ural Platinum,
mountains, an attempt was made by the Russian Government to
adopt this metal for coinage ; but platinum is very much harder
than gold, and the expense of working it is therefore muchgreater, besides which, it is only found in a few localities. In
less than 20 years the few coins that had been circulated were
called in, and the idea of using platinum for coinage was given
up. Owing, however, to its hardness and durability, platinum is
most invaluable in the manufacture of chemical apparatus.
And now I must wind up my account of the metals which James ll.'s
have been found unsuitable for coinage, by telling you of the &un money -
famous gun-money which was coined by order of James II., and
issued in Ireland. He ordered his officers to collect any old
metal that they could lay hands on, and the money which was
struck after this collection had been made was said to have been
composed of old guns, broken bells, waste copper, brass, pewter,
and old kitchen pots and pans. If we leave the old guns and
broken bells out of our list, we shall have just such a collection
of odds and ends as might be picked out of a nineteenth century
scavenger's cart ! James II. also tried to get pewter crown- James II. 's
pieces accepted for the value of silver ones. I am afraid he must Pewter.r r crown -pieces.
have had a bad conscience as far as his money matters were
concerned, and he was not the only sovereign who has played
tricks with the coinage of his kingdom when hard driven
for cash.
18 COIN OF THE REALM:
Chapter II.
Metals in use
now.
Alloy.
Sucoess of ourpresentsystem of
coinage dueto certain
points.
Portability.
Divisibility.
I have told you all that is necessary for you to know at
present concerning the metals which have been found unsuit-
able for coinage ; for the future, therefore, I shall direct your
attention to those metals and mixtures of metals which are
actually in use at the present day. (When a superior metal
is mixed with an inferior one, it is usual to say that there is so
much alloy in the coin. Gold and silver are alloyed with copper
before they are sufficiently hard to coin well.)
In the first place, you should understand what are the
principal points to which we owe the success of our present
system of coinage. I will suppose that you are a young manliving in a country village, and that you are going to London
for a long day's shopping. Your neighbours, as well as your
own family, have asked you to do all sorts of commissions for
them, so you are anxious to avoid carrying with you anything
that will take up much room, for you know well enough what
a medley of odd-shaped parcels you will have accumulated by
the time you come to the end of your day's shopping—clothes,
groceries, meat, stationery, all kinds of things will have to be
conveyed about somehow. "Well, how would you like to have
your money ? In what shape, I mean. Not in the form of iron
bars, or lumps of lead, or big copper pieces, I am sure ! Yourlist of commissions come to over £ 4, besides which you musthave enough money with you to pay for your journe}- and
some food. A =£5 note will hardly do, because of your railway
ticket to begin with. Suppose you carry three sovereigns,
two half-sovereigns, and ten shillings' worth of silver in your
purse, hidden away in the depths of the inner breast-pocket of
your Sunday coat ; the other ten shillings, in the form of small
silver and a few coppers, being stowed away in vest and trousers
pockets, where you can easily get at them. One necessary
point, then, is that money should be portal e ; that a few coins
should represent a sufficiently large sum of money, and that
these few coins should be neither too large nor too heavy.
You get to the station by driving six miles in a spring-cart,
and at once go to take your ticket, asking for a " Second-class
WHAT TS IT? 19
return." " Twelve and fourpence," says the man at the hole,
and you hand him a sovereign from your purse. How awkward
it would be for you if the ticket issuer were unable to give you
change ! But no such fear;you get your change clapped down
in front of you immediately—three half-crowns and two
pennies—which are easily counted as you sweep them into
your hand, and move on to make room for the person behind
you. Off you go, with a light heart and a heavy purse, but
not so heavy as to interfere with your comfort in any way.
Arrived at Paddington, you set out to walk, and hail the first
'bus which is going in your direction. Twopence is the fare,
very easily picked out and paid.
Then shopping commences, and you go from shop to shop
paying various odd sums for the different articles you have to
buy : 3s. at one place, a florin and a shilling ; 2s. 9d. at another
—one of your half-crowns and a threepenny piece; £1 2s. 4d.
at the grocer's—a sovereign, two shillings, and four pennies;
so you go on. There is no difficulty in paying the exact amounts
required, for, if you cannot make it up from your own moneyin hand, the shopkeepers can readily supply you with change.
Any odd sums can be quickly made up, and our English coins
are so easily recognised that you need lose no unnecessary
time in examining the change that is handed to you. A penny
and a half-crown, for instance, are so different in colour that
no one could mistake the one lor the other ; and the same maybe said of a halfpenny and a shilling. Then a florin, or two
shilling piece, and a half-crown, though both silver coins, ditfer
greatly in appearance ; the half-crown is the larger of the two,
and the stamps impressed upon it are not at all like those with
which a florin is mprinted. A sovereign and a shilling, it is
true, are near of a size, the shilling being rather the larger of
the two ; but only just feel the difference in weight between
them ! The sovereign is so much the heavier of the two coins
that you could tell which was which in the dark, and the same
proportional difference in weight exists between a half sovereign
and a sixpenny bit. Even our little silver threepenny bit has
now no rival, though a few years ago, when fourpenny pieces
(called groats) were still issued, it was necessary to look closely
at the smallest silver coins in one's purse.
I hope I have succeeded in proving three points in favour
20 COIN OF THE REALM
Indestructi-
bility.
Furs not in-
destructible.
Nor cattle.
Intrinsic
value.
Gold morevaluable thansilver.
of our present system of coinage : first, that it is portable;
secondly, that it can be readily divided into odd or even sums;
thirdly, that all the coins now in circulation can be easily and
immediately recognised by old or young, rich or poor.
Another point to be considered in the choice of a material
for money is, that it should be indestructible.
No doubt the North American Indians still carry on a brisk
trade with furs, exchanging them for other things which they
require. But if a fire should ever break out in one of their
villages and burn up their stock of skins, the loss would be as
disastrous for them as the breaking of a bank would be for
more civilised folk. Besides this possible misfortune, there is the
certainty that in the course of time furs will wear out ; no one
would care to accept a fur which had worn into bald patches in
exchange for anything new.
Then, again, as to cattle. In the days when they were used
for exchange purposes, the time must have frequently arrived
when a man had to kill and eat his money rather than run the
risk of its dying of old age.
Our coins, however, are much more indestructible than furs
or cattle ; they wear out very slowly, and if the stamps imprinted
on them do get rubbed, or the metal so much worn away as to
make the coins too light for circulation, they can be melted down
aud re-coined with very little loss of metal.
And not only do our coins stand a good deal of wear and
tear, but they are also made of substances that are valuable in
themselves, which is another advantage for them to possess,
since they are the chosen medium of exchange for all other rare
and valuable things. Those of you who live in large cities or
towns have probably often looked into a goldsmith's shop
window. What a fine display of beautiful and glittering objects
are to be seen there, are there not ? particularly at night, when
the unshuttered windows, protected with iron bars, invite
passers-by to look into the shop, which is one blaze of light.
Comparatively few people are rich enough to indulge in the use
of such massive gold plate and jewellery as one sees in a gold-
smith's window ; but pass on to a silversmith's shop—the orna-
ments, jewellery, and plate displayed to view in his window are
quite as beautiful in their way as the gold ones, and not any-
thing like so costly. There are three reasons for this : first,
WHAT IS IT ? 21
that it costs a great deal more to produce gold than to produce
silver ; secondly, that there is much more silver in the world
than there is gold ; and, thirdly, that gold is about twice as
heavy as silver.
Both gold and silver are easily restored, if they get tarnished,
and they do not either of them rust, like iron.
And now, recall to your minds the difficulty there was in
olden days of exchanging different articles fairly, because of
their unequal values. A fur would have been quite spoilt had
it been cut up into small pieces to represent the value of pence
or halfpence; and, as to a cow, I only hope that many nations
did not adopt the barbarous plan which some savage tribes
have been known to practise—namely, that of catching a cow,
cutting a good-sized piece of flesh out of its living carcase, and
then driving it back into the prairie or woods again ! This
was actually the method which some savage people adopted for
supplying their larders with prime beef. But those who were
hardly cold-blooded enough to practise such live butchery could
not be always slaying their beasts whenever they wanted a
pennyworth of milk, or a half-quartern loaf; nor would their
neighbours be in constant need of beef, mutton or pork.
The metals used for coinage get over this difficulty nicely for jyreta i eas,i vus ; they are so equal in quality and weight that a large lump of divided and
gold or silver can be easily sub-divided into many smaller lumps su m e"
of equal weight and size, so that each coin will contain as nearly
as possible the same number of grains of gold or silver, and will
possess the same value. This is another very desirable quality „ , , ,
in the material used for money; indeed, the only unsatisfactory that the value
point to be mentioned with regard to our present system of °f metal is
coinage is, that gold and silver vary much in their value from
time to time, and whenever a change takes place in the value of
either metal, somebody has to suffer for it.
Hitherto I have avoided as much as possible using words Explanation
which you would not easily understand, but the time has arrived of technical
when I must explain to you the meanings of several terms which
are used in reference to money only.
The word currency is applied to all kinds ofmoney which may currencybe freely circulated. You have heard or read of the current of a
river or stream : the word current means flowing onward.
If you take a shilling out of your pocket, and buy something
22 COIN OF THE REALM :
Legal tender.
Standardmoney.
with it at the confectioner's, he may immediately go and spendthat same shilling at the draper's, or the grocer's, or whereverhe likes. The next person into whose hands it tails may be just
starting on a journey;perhaps he pockets your shilling with
other silver coins, and when he arrives at his destination, spends
it. In the course of a few hours the shilling you possessed so
lately may have reached some place two hundred miles or morefrom the town in which you live, and there is no saying howmuch further it may not have to travel before it is worn out. Inthis manner the currency of a kingdom flows on like a river ; our
coins—known by the name of "current coin"—pass from one
person to another, no one knowing through how many hands a
coin may not have already passed when it reaches them, nor
when it will ceasa to circulate. Under the term " the currency "
are included our British gold, silver, and bronze coins ; also a
certain amount of paper money, but only such as may be freely
circulated. There are many kinds of paper money which can
only be presented once for payment, or exchanged for current
coin once ; such money cannot be considered current money.But a Bank of England note, which, having been issued crisp
and clean-looking, passes from hand to hand, from pocket to
pocket, until it has become greasy, soft, and soiled, may certainly
be said to belong to our currency,
" Legal tender ''"
is another term used in speaking of money.
It is applied to any substance which the laws of the counti'y in
which you live allow you to offer in payment for goods. Now,there are two kinds of metal money : (1) Standard money :
(2) Token money. The first is called " unlimited legal tender,"
because it may be coined by permission of the state in unlimited
quantities, and freely circulated through the kingdom. A gold
sovereign is our British standard coin ; our English government
allow the issue of an unlimited number of sovereigns from the
mint, and any amount of them may be used at a time. Suppose
your father went to the head master of your school, and said,
" Here are ten sovereigns, due to you for my son's first term at
school." Perhaps the master might reply, "I would muchrather receive a cheque for £10 from you, if it is all the same to
you." But then your father would have a perfect right to say,
" I cannot make it convenient to pay you by cheque," and the
master would be bound to accept the ten sovereigns.
WHAT IS IT ? 23
Suppose, however, that your father offered to pay your master Token
the ten pounds in silver. Ah ! that would be quite another monev -
matter ; our silver coins are only token money, not standard
money, and they are legal tender only up to a certain amount.
Forty shillings is the largest sum in silver that a person is
strictly bound by law to accept, and twelve pence only in
coppers (as we still call our bronze coins) are legal tender. Of
course people often oblige each other by accepting more than forty
shillings' worth of silver, or a shilling's worth of coppers ; but
it is unusual to carry about large amounts of silver or copper
—
indeed, it would be uselessly loading one's purse or pocket to do
so when there is so much representative money in circulation. I
have just made use of another term which requires explanation—i Kepresenta-
" representative money." A sovereign represents twenty lve monev -
shillings in silver, does it not? and a half-sovereign ten
shillings ; besides which there are silver coins representing
twelve, six, or three pennies. A coin which represents several
coins of an inferior metal, is called "representative coin."
These representative coins are more convenient to use than a
very large number of less valuable ones ; if there were no such
things as sovereigns or halt-sovereigns in England, wealthy
people would have to take about their money in wheelbarrows
sometimes, as the Swedish merchants of whom I told you did
a hundred years ago, unless they adopted paper money,
For many years past there has been a great difference of Mono-metal-
opinion in the minds of learned men as to whether a nation lists and bi-A
.metalhsts.
should adopt one standard metal, either gold or silver, for
coinage of unlimited legal tender, or whether coins both of gold
and silver should be allowed to circulate freely and in unlimited
quantities in the same country. Those who are in favour of a
single standard are called " mono-metallists," whilst those who
approve of a double standard go by the name of " bi-metalliste."
When you are grown up I daresay you will each of you be able
to decide for yourselves which plan you think would work best.
I hope some of you will then get up the subject so well, and
give it such careful consideration, that you may become
authorities on your side of the question, and may use your
knowledge for the good of your fellow-men. But I am not
competent to be your guide in the matter, nor do I think it
necessary that you should trouble your heads about it until you
24 C6IN OF THE REALM
;
Papermoney.
Intrinsic
value of
coins,
Intrinsic
value of
papermoney.
Intrinsic
value of
token coins.
are older and have gained experience. In these papers, there-
fore, I shall only tell you about the different kinds of moneywhich are in use at the present day.
There are countries in the world—we have one very near to
us, Scotland—where people prefer to use paper notes rather than
gold ; but when this is the case, it is of the utmost importance
that those who wish to turn their notes into gold shall be able
to do so. For this purpose gold is lodged in vaults, and notes
are issued in the place of the gold coin. This plan has one
advantage, which is, that the gold coins do not get worn out
so quickly; but then, on the other hand, the notes get so
dreadfully dirty at times, that they may even endanger the
lives of the persons who handle them. One thing, however, is
certain : of whatever substance standard money may be com-
posed, it must be possible (in the long run) to exchange it for
something whose cost value is almost equal to the sum whichthe standard substance represents. Just think of the difference
in value between one of our gold sovereigns and a bank note.
The former contains a trifle more than 113 grains of fine jiold;
1 grain of gold is worth about 2^d., therefore you will find, if
you take the trouble to work out the sum for yourself, that the
intrinsic or real value of a sovereign is worth as nearly as
possible what it represents, viz., 20 ahillings, or 240 pence
;
whilst the intrinsic value of a bank-note, no matter how large
the sum may be which it represents, is about one-eighth of a
penny
!
If you were to go into a silversmith's shop, and ask to look
at some watches ; and if, when you had chosen the one youliked best, you were to offer the shopman the first bite out of a
beef patty you had just bought, he would either be very muchinsulted by your behaviour and show fight, or else he would
take you for an escaped lunatic ! And yet a bite out of a
freshly-made beef patty would be worth quite as much as the
eighth of a penny, which is the actual value of a bank-note for
<£10 or £20, and the latter could be as easily torn up or burnt
as the mouthful of patty could be swallowed.
Again : Token coins are not really worth the sums which
they are allowed by law to represent. For instance, our British
silver shilling does not contain a shilling's worth of silver ; it is
not worth more than 8d. or 9d. at the present market value of
WHAT IS IT ? 25
silver, and our bronze penny is only worth about one-fourth of
itself. For this reason the token coins of one country are not
legal tender in another. Were you to visit France, you would
find our English silver and bronze coins of no use to you : but
with standard money it is different. Each state guarantees (or
answers for it) that its gold or silver standard coins contain a
certain proportion of fine gold or silver, therefore the actual
amount of metal which each coin contains fixes its value ; for,
as I have already told you, gold and silver lose very little in
weight or quantity by being melted down. Our British gold
standard sovereign is accepted in every country possessing a
money currency, in exchange for national coin of almost equal
value, because it is a well-known fact that each sovereign which
has not had very much wear, contains its 113 grains of fine
gold.
And now we come to the finding of the precious metals.
I am sure you will all feel a much greater interest in metal
coins, and value them more highly, when you know more of
their history. You must not imagine that every man who can
well handle a pick or shovel is fit to become a miner. I suspect
that many a man has gone to the gold diggings with this mis-
taken idea, and has been much disappointed at not making his
fortune in a very short time. A good miner requires to be
highly educated in many sciences. To begin with, he should
know something of geology, that is, the science which teaches
the nature of the various substances of which the earth is com-
posed. A geologist understands in what description of ground
miners may dig with a reasonable chance of finding minerals,
for without this knowledge men might spend all their work-a-
day lives in looking for that which they might never find.*
Mineralogy and chemistry are also very necessary sciences;
the first teaches men the nature and value of the different
mineral substances found underground, and by a knowledge of
chemistry they learn how to separate one metal from another
Intrinsic
value of
standardcoins.
On the edu-cation of a
miner.
Geology.
Mineralogyandchemistry.
* I have heen told that a celebrated mineralogist of the Strand, London,sells boxes containing two sets of fossils, arranged in separate trays. Thefossils in one tray belong to those systems of rock in which gold is not to befound, whilst the other lot are such as would be found associated with gold.Those who are about to become gold diggers, and who buy one of these
useful collections to take with them, have plenty of time for studying thespecimens on their outward voyage.
26 COIN OF THE REALM
Machinery,&c.
Mr. Bullionand JohnSmith take aballoon trip.
metal or substance. An ignorant person might throw aside as
worthless lump after lump of stony-looking substance, which, if
they fell into the hands of skilful miners, would be so treated by
them as to yield a considerable quantity of valuable metal.
Just as one of you might pick up a diseased oyster—"Bah!"you would exclaim, and throw it away in disgust. But that
very oyster might contain a pearl of great value, which a pearl
diver would have recognised in a moment.
Then again, for underground mining, a knowledge of
machinery and mechanical contrivances is necessary before
miners can understand how to unearth a metal when they have
discovered where it lies ; and even then some of them must be
good at mathematics and underground surveying, or they will
spend a great deal of their time and labour in vain.
Any one of my boy-readers who has a taste for adventure,
and would like to go off some day to the gold or silver
diggings, will perhaps be surprised to find what a special
training he ought to go in for, before he would be fit to under-
take much in that line. Of course, there are always a certain
number of labouring miners, who just do as they are told
without being able to give an intelligent reason for doing it
;
but those are not the men to rise—they will never become
agents of any branch of the work, these being only chosen from
amongst the miners who have shown a knowledge of mining,
cau do the required work themselves, and are fit to direct
others.
In the next chapter you must imagine yourself to be John
Smith, aged 16, and that your iriend Mr. Bullion has invited
you to take a voyage through the air with him in his balloon,
to visit one or two of the chief mining districts in the world
where the jrecious metals (as gold and silver are usually
called) are brought to light and prepared for use. This is by
far the most convenient, form of travelling. Mr. Bullion under-
stands the management of his balloon so well that you and he
will avoid all the dangers and fatigues of travelling by sea or
land; and, besides that, will see by the aid of the telescope
which is fixed in the balloon a great deal of what is going on
below without being obliged to alight Very often you will
pass over vast tracts of country, and see all you wish to see
unobserved even by the busy people below you.
WHAT IS IT ? 27
Chapter III.
John Smith: Hurrah! I never exported to find myself up in "TTpina
a balloon ; but here we are, far away from old England. We balloon."
must be getting near America now, aren't we, sir ?
Mr. Bullion: Yes; we shall sleep in Panama to-night if all
goes well. I hope you like balloon life as much as you expected
to do so ?
John Smith : I couldn't have believed it would have been eo
jolly ! To roll oneself up at night in one of your big furs is
luxury, and it is great fun cooking one's own meals over a jolly
little spirit stove. Then, the country all along has been grand
to look down upon from this height ; I do not think I ever
realised before how beautiful the world is.
Mr. Bullion : I am glad you can appreciate that. You will
find also that the study of mining reveals to us many wonders
and beauties of creation which lie hidden beneath the earth's
surface. And now that we are fast approaching the gold mining
districts of California, it is high time to prepare you a little for
what we are going to see. Tell me first whether you can re-
member what our course has been so far.
John Smith : I think I can do that off pat, for there has not Route from
been time to forget it yet. We started from the Land's End, ^p^nama^Cornwall, in a southerly direction, and came down at Brest
Harbour, on the north-west coast of France. The next day westill travelled southward, keeping the western coast line of France
well in sight. We passed the north-west oorner of Spain, and,
bearing down the western side of Portugal as far as Lisbon,
took another rest there. Up we went again the following
morning, and skimmed along over the Azores, the Canary andMadeira Islands, until we reached the Cape de Verde group,
when you let us down into St. Jago ; and now we are scudding
along over the Atlantic due west, have crossed the line, and are
nearing the Isthmus of Panama. Why, it's the best geography
lesson I have ever had in my life, and one that I am not likely
to forget in a hurry, either
!
Mr. Bullion: You have certainly learnt your lesson well.
Perhaps you are as good at geology as you are at geography,
and can tell me in what kind of soil gold is found in California ?
28 COIN OF THE REALM:
John Smith's John Smith : I know nothing about such things, Mr. Bullion,
ideas of but I have always supposed that men dug deep down into the
earth, and then burrowed about like rabbits until they found
some big nuggets of gold, and that the bigger the nugget was,
the greater the luck of the man who discovered it.
Mr. Bullion (laughing) : I believe a good many people run
away with that idea. You, my dear young fellow, woidd expect
if you joined a mining expedition, to work with your mates until
you hit upon a nugget of several pounds weight at least, whenyou would decamp with your treasure, carry it home to old
England, and make your fortune by disposing of it at the
Mint.
John Smith : That is exactly what I should do, sir, you maydepend !
Mr. Bullion : And, pray, how do you think a mining com-
pany would flourish, if, after they had gone to the great expense
of furnishing all the requisite machinery and appliances for
working a mine, the men whom they had engaged to do the re-
quired manual labour, or even those who superintended the
different departments, were allowed to go off with their treasure
whenever either of them came upon a find worth having ?
John Smith : That never struck me before, but of course it
would not be at all fair. I thought everybody went off to the
diggings on his own hook.
Soil in which Mr. Bullion : Sometimes mines are worked by enterprisingthe precious individuals with sufficient capital to make a good start. In dis-metals are r °found. tricts also where the metals lie near the surface of the earth, one
or two men without capital may combine to work together and
make a living out of what they find. But when the ore
lies deep down below the earth's surface, and has to be extracted
from rock, experience has taught men that it is better to form a
company for this purpose, on account of the large amount of
capital required, and of the uncertainty as to how long it maybe before a mine begins to pay. When you and I have visited
a few mines you will understand this a great deal better.
Mining John Smith : Do tell me, sir, how mining companies are
managed. I should like to know something about it before we
get there.
Mr. Bullion : Suppose, then, that I had every reason to
suspect the existence of gold under any particular plot of ground.
companies.
WHAT IS IT? 29
I will tell you what I should do : First, I should pay a visit to
the owner of that land, and obtain from him permission to look
for gold. I should next try to form a mining company amongst
my trusty friends, choosing only men who were as ready to risk
their capital in the enterprise as myself ; having done which, we
should make our terms with the landowner. Probably he would Rent of
mark out the extent of ground within which he would allow us ground -
to carry on our mining operations ; we should pay a fair rent
for the ground, and also agree to hand over to the landlord a
certain proportion of all the metal we took out of his ground,
ready prepared for the market.
John Smith : But what about the labourers ? It would be
hard lines indeed if those men, who are the real finders of the
metal, could never make a good thing of it.
Mr. Bullion : So it would, John ; but that is not the case.
Mining is generally managed on fairer principles than almost
any other industry which necessitates the employment of a large
number of hands. In our own county of Cornwall, where such Cornish
extensive mining operations have been carried on for a great mining rules,
number of years, the whole system of mining has been brought
to such perfection that in many other districts the same rules
have been adopted. The gold mines which we shall soon be
visiting belong to a British company, whose superintendent or
general manager is a great friend of mine j and as the whole of
the work is being carried out in Cornish fashion, I cannot do
better than explain it to you. There are two kinds of labour
required in mining—first, that which consists in sinking shafts,
and making underground excavations in search of metals ; and
secondly, taking the metal out of the ground and preparing it for
use. The first kind of work Cornishmen call tut work or dead Tut work.
work ; it necessitates an immense amount of manual labour,
therefore men are paid so much per fathom, according to the
quantity of work they get through in a day. But when metal
is being extracted, the miners are paid so much in wages for
every ton of gold, silver, or copper ore they raise. Sometimes
in Cornwall they have been allowed, instead of receiving wages,
to keep a certain proportion of the ore, and for this reason the
extraction of metal is there called tribute work ; but I do not Tribute
imagine that this plan would be adopted when gold or silver arewor "•
being extracted.
COIN OF THE KEALM
Miningcontracts.
Miningofficers.
John Smith : Is a ton of ore always worth the same amountof money ?
Mr. Bullion: No; some ores yield a greater proportion of
grains of fine metal than others, for which reason ('as well as fox
others) the contracts or agreements by which the minei s are
bound are made only for very short periods of time. Fresh ar-
rangements are generally entered into every few months, which
seems to me a very fair state of things. It gives the miners
frequent opportunities of agreeing for higher wages whenever a
paying piece of work turns up, whilst the company also are at
liberty to lower their standard of daily wage when there is a
failure for a time in the quantity of metal produced.
John Smith : All that sounds as fair as fair can be. But it
must give the managers of the mines a lot of trouble.
Mr. Bullion : I do not think they make a trouble of it. Ona given day, when a new contract is to be entered into, the
miners gather round the mine office, and the agents call out each
piece of work that has to be contracted for from a book in which
the portions of work have all been entered. Then the men bid
for the work—one will undertake it for so much ; another will
do it for a little less ; until the work or bargain is considered as
taken by the lowest bidder, and his name is immediately regis-
tered opposite to his piece of work in the setting book.
John Smith: It must be just like an auction turned upside
down—each bargain is knocked down to the lowest instead of to
the highest bidder.
Mr. Bullion : Yes ; and you may be sure that the first few bids
are for very much more money than the piece of work is worth.
Generally one man is chosen to be spokesman by the mates with
whom he is accustomed to work ; the contract is made with him,
and he and his gang carry it out together. There are certain
rules laid down also, a copy of which every miner has to sign ; if
this were not done, some of the men might throw up their work
before a contract was fulfilled, or whenever they were finding less
metal than they hoped or expected to find.
John Smith: I suppo&e there are always certain miners
appointed to overlook what the labouring men are doing ?
Mr. Bullion : Oh, dear, yes ! The business of a miner is
divided into several departments. There are the underground
operations, the pit work and machinery, the dressing and surface
WHAT IS IT? 31
work, the accounts and financial matters, and, lastly, the general
control. For each of these departments there is a superintendent
or agent, and, over them all, a general manager, who reports
progress to the committee of the mining company from time to
time, and gives them his advice. This general manager, as you
may well behove, requires a good head-piece (as Devonshire folk
say), and the agents also are generally chosen from the most
intelligent of the miners ; so you see it is a great advantage to a
labouring miner to gain as much knowledge as he can about all
the different branches of mining operations, in order that he mayfit himself for one or other of these responsible posts. But it is
high time to think about dinner, so let us leave our mining for
some cooking operations now.
(Mr. Bullion and John Smith had an excellent dinner : Dinner in the
the former minced some tinned meat, and made and fried a good Dalloon -
dish of rissoles ; whilst John vigorously plied his egg-whisk, andturned out a very respectable cheese omelet for the second course.
Then followed coffee, and Mr. Bullion's pipe.)
John Smith : Please, sir, are you ready for a talk ? I wouldn't
ask you until I saw that you had finished your pipe, but I amlonging to hear some more about mines.
Mr. Bullion (smiling) : You have been very forbearing, John,
I must allow. I am ready for anything now, so what is it
to be?
John Smith : You asked me about geology, and the kind of
soil in which gold is to be found ; but I know nothing about
such things.
Mr. Bullion ; I am so glad you have reminded me of it, for
I want to talk to you about those very things before we arrive at
the gold mines. I am not going to teach you geology, youngman ! no, nor mineralogy either ; but only so much of these
sciences as may help you to understand where certain metals
are to be found, and in what form.
John Smith : Those are just the very things I am most anxious
to understand, so I shall listen to you with all my might.
Mr. Bullion: Very well, then. Geologists tell us on good Formation of
authority that the earth must once have be^n a molten mass— roc •
that is, a mass of substance made fluid by heat. Imagine it, if
you can : a heated fluid mass revolving in space with great
rapidity. As it revolved it became gradually cooler, and was at
32 COIN OF THE REALM
:
Formation' of
strata.
Igneous andaqueousrocks
.
Unstratified
and stratified
ocks.
length coated with a solid surface, composed principally of the
rock crystals named mica, quartz, and felspar. This crystal
surface was granite, the oldest solid substance of which the earth
is formed. Yarious gases were thrown out from the heated body
of the globe : amongst others, those known by the names of
oxygen and hydrogen, which, when combined, form water. Youknow quite well that if water were kept boiling—that is, at a
temperature of 212 degrees—it would all turn to steam; but
perhaps you do not know the reason for this, which is that
oxygen and hydrogen become separated at that high temperature.
For the same reason, therefore, oxygen and hydrogen will not
combine at a very high temperature, consequently the earth
could not have been surrounded with water until its surface
had sufficiently cooled down to allow of the union of these two
gases.
John Smith : How very interesting this is ! I had no idea
that geologists had found out so much.
Mr. Bullion: I felt sure that this part of our subject would
interest you. Well, Avhilst the earth's surface was becoming
gradually cooler, the interior of the globe must still have been
boiling and seething, just as the inside of a volcanic mountain
does at the time of an eruption. There were constant eruptions
of mud and gases going ou from beneath, breaking through the
granite coating in all directions ; and, wherever this happened,
the action of the water from without, and the mud and gases from
within, broke off fragments of the granite, which gradually
formed a deposit at the bottom of the ocean. By degrees, one
deposit or sediment was formed above the other, in beds or
layers, called strata (strata is the plural form of the Latin word
stratum, a bed or layer) ; as they cooled and hardened, these
strata became rock, and are called by geologists stratified rocks.
They are also named aqueous or sedimentary rocks (from the
Latin word aqua, water), on account of their having been
formed by the action of water ; whilst those rocks which were
formed by the action of fire or heat are called igneous rocks
(from the Latin word ignis, fire).
John Smith : As granite rocks were formed before thei*e was
any water, they must be igneous rotks, are they not?
Mr. Bullion : Yes;granite rocks are igneous, and, as they
were not formed in beds or layers, they are called unstratified
WHAT IS IT ? 33
rocks. To this class also belong all rocks of volcanic origin,
such as those formed of lava.
John Smith : Are there a great many different kinds of rock,
sir?
Mr. Bullion : There are many kinds of stratified rocks which
were formed at different periods in the world's life, but not
nearly so many varieties of unstratified rocks. At present it
will be sufficient for you to remember the two classes, igneous
and aqueous;you will very soon learn to distinguish the one
from the other. It is a great temptation to me to run on with
this geological talk, and to tell you all about the different
systems of rocks and the order in which they were formed;
but I really must not do so now, there is so much still to be said
about other things before we go a-gold-digging.
John Smith : I must say I should like to learn geology.
Mr. Bullion : I will certainly teach you all I know about it
some day, I hope. But for the present I must content myself
with giving you those particulars which will be a help to you
when we reach California. Recollect, then, that granite is the
oldest kind of rock ; all other rocks were gradually built up on
this foundation, most of them having been produced by the
wear and tear of that class of rock which immediately preceded
them.
John Smith : When you say " most of them," I suppose you
mean that the igneous rocks were not formed in that
manner ?
Mr. Bullion: There are aqueous as well as igneous rocks, Limestone,
which were not formed merely of sedimentary deposits. Lime-
stone, for instance, which was formed by some chemical process.
You see, earthquakes and volcanic eruptions were constantly
taking place at all periods of the earth's history. At times they
must have been very violent, for we owe our mountains to these Origin of
internal convulsions of nature.mountains.
John Smith : Was that the origin of mountains ? Well, I
never knew that before !
Mr. Bullion : Yes ; mountains were upheaved by the action
of internal heat, and high ground was often sunk beneath the
seas by the same wonderful influence ; whilst the various gases
which forced their way through the different strata at such times
combined with newly-created substances, caused all sorts of
3
34 COIN OF THE EEALM
Systemssometimesmissing.
Land rising.
Landsubsiding.
Order of
strata alwaysthe same.
variations in the natures and textures of these stratified
rocks.
John Smith : Surely it must be very difficult to distinguish
one class of rock from another ?
Mr. Bullion : It requires careful study, certainly, especially
as in many districts some of the systems will be found missing.
John Smith : How can that be if they were formed one after
the other in proper order 1
Mr. Bullion : For the simple reason that the various volcanic
disturbances which were constantly taking place, combined with
the action of floods and storms, altered the surface of the earth
continually. What was dry land during one period might be
covered with water during the next. Dry land, you know,
would have no sediment deposited on it—that only took place
under water ; therefore dry land might miss over a system, and
then sink low enough to be covered with a layer of the next
deposit.
John Smith: The world certainly has been subject to strange
" ups-and-downs " in its life ! Do you think that those changes
still take place 1
Mr. Bullion : Undoubtedly they do, but in a more gradual
and less violent manner. There is a large tract of land situated
on the northern shores of the Baltic Sea, which has been for
many years, and still is, rising at the rate of four feet in a
century ; while, on the other hand, a great portion of the coast
of Greenland has been subsiding during the last four hundred
years, and the whole continent of South America is supposed to
be sinking.
John Smith : But surely, sir, that gradual sinking and rising
is not due to earthquakes and eruptions.
Mr. Bullion : Do not you know, John, the difference between
fiercely boiling water and water that is just beginning to simmer 1
There is every reason to believe that, although the internal dis-
turbances of the earth are far less frequent and violent than they
used to be, yet they are still taking place and causing changes
in elevation.
John Smith : But all those alterations that took place long
ago must have made it even more difficult to distinguish one
system of rocks from another.
Mr. Bullion : Not at all, for this reason. The order in which
WHAT IS IT ? 35
those systems were originally deposited has never been disturbed.
Suppose you and I were digging deeply into a mine, and observ-
ing the different strata as we came upon them. If one system
of strata were missed over, it would be an older deposit than
that through which we had just penetrated, and the strata weshould next come to would be older still. This rule always holds
good, and is a very safe one to go by : you will never find a
later deposit underneath an earlier one. And this same rule,
also, is most useful to miners ; for, as I have already told you,
there are some strata in which they know that it is of no use
whatever to look for metals.
John Smith : I well understand now. But how could so
much have been found out in the first place, when all the lower
systems of strata must have been covered by the last ?
Mr. Bullion : That, also, was brought about by those wonder- Volcanic
ful volcanic disturbances. When mountains of granite or of some ^termakeearly stratified rock were upheaved through various systems of this known,
later deposits, the edges of these later strata were forced up on
each side of the mountain and exposed to view. Water, also,
often lays bare different strata of rock; you know how the cliffs
on the sea coast get worn away and altered by the dashing of
the waves upon them, do you not ?
John Smith : Yes, to be sure, I do. I shall notice all those
sort of things much more for the future.
Mr. Bullion : As we shall be chiefly concerned with the con-
tents of the oldest stratified rocks, I must say a little more about
them. I told you that granite was composed of mica, quartz, Granite,
and felspar, therefore you will be able to tell me of what the
next system was composed.
John Smith : Surely it must have been of worn away granite,
sir?
Mr. Bullion : Yes ; these fragments of mica, quartz, and
felspar, being deposited upon a highly heated surface, became
crystallized by the combined effects of the heat, mud, and gases
which penetrated them. These rocks are sometimes called meta- Metamorphic
morphic rocks because they underwent this metamorphosis orrocks *
change ; and some geologists call them gneiss and mica schist
rocks. The next system deposited was less crystallised and morestratified.
John Smith : If every system has three or four names, like
36 COIN OF THE KEALM
:
the first, I shall have enough to do to remember them ! Let mesee ; the earliest stratified rocks are called aqueous, metamorphicr
and gneiss and mica schist
!
Mr. Bullion (laughing) : You will get as much puzzled by
these various words as a good old friend of mine does—a Devon-
shire man. He says that there are a great many stratagems to
be met with underneath the surface soil. But I am not going
to burden you with any more systems at present ; I only wantQuartz. vou ^Q remember that to this class of stratified rocks belong those
commonly spoken of as quartz rocks. When we get to the
diggings you will hear a good deal about quartz, for gold, silver,
tin, and copper are all found embedded in the various kinds of
rock-crystal to which this term is applied.
Finding of John Smith: I suppose the miners have to dig down deeply
before they come upon the metal, haven't they, sir ?
Mr. Bullion: The depth varies considerably, but, as you mayimagine, working in such hard, rocky ground requires a great
amount of manual labour, and the workings of a mine are often
continued to a very great depth. I will give you an idea of the
manner in which metallic or mineral ore may be unearthed. Aparty of miners, whilst breaking up rocky ground, perhaps come
upon a fissure or large crack. As they proceed to open it and
follow its track, they find that it extends in a downward-slanting
direction ever so deep into the ground. This fissure may be filled
either with sparry and stony substances, with here and there
bright spangles of the metal they are in search of; or else it may
contain earthy or non-metallic mineral ore—a softer composition
than metal, and one in which you would not expect to find
treasure. With renewed energy the miners work on, and at
length they are rewarded for their pains by coming upon irregular
masses or bunches of metallic ore, sometimes of immense size
and value. These masses of ore may possibly occur at intervals
Veins and throughout the whole of the fissure. These fissures are called
odes. veins, and veins that contain metal are styled lodes, to distin-
guish them from those fissures or veins which are filled with
non-metallic minerals.
John Smith: How jolly it must be to come upon a bunch of
gold!
Mr. Bullion (laughing) : Very jolly indeed when you do; but
unfortunately gold is more frequently found in small crystals or
WHAT IS IT ? 37
grains accompanying other metals, such as silver, copper, lead,
or tin. Again, although gold is frequently found in quaitz
veins, it is discovered in greater abundance in what are called Gold found
fragmentary deposits—that is, in the sands of rivers and intaVv^deDoT'ts
other alluvial soils.
John Smith : I do not know what alluvial soil is.
Mr. Bullion : The word alluvial is derived from the Latin jyiuviai
word alluvio, a flood or inundation; alluvial soil, therefore, soil,
means a deposit made up of loose gravel, sand, and mud. It is
found chiefly in low ground, and is supposed to have been carried
there by a stream, or else by floods. Very often gold is found
in this kind of soil, situated in the neighbourhood of a group of
rocks of early origin, and it is thought that the alluvial deposit
was at one period washed off those neighbouring rocks by heavyrains or floods.
John Smith : It seems a very likely thing to have happened.
I suppose the gold is all mixed up with the soil, isn't it ?
Mr. Bullion : The gold found in alluvial beds, although q h n0t
always in a metallic state, is not quite pure or native, but gene- always
rally combined with silver, copper, and small quantities of other
metals, including iron. The grains of metal generally form a
layer underneath the soil. They sink through it, owing to their
greater specific gravity.
John Smith: Oh, Mr. Bullion, I am so glad you have used Specific
that expression, " specific gravity, " for I have often met with gravity,
it in books, and have never been able to find out what it
meant.
Mr. Bullion : I can soon explain it to you. But you must
allow me a few minutes' grace, for I really think I have earned
another pipe, don't you ?
John Smith (laughing) : I should rather think you had, sir ;
so I'll fill your pipe for you, and light it, too !
38 COIN OF THE REALM
Chapter IV.
As soon as Mr. Bullion's pipe was drawing comfortably, he
began as follows :
Mr. Bullion : To specify the weight of any one substance,
you must compare it with another. All solid substances are
compared in weight with an equal bulk of water, and this
ingenious operation is called taking the sjyecific gravity of a solid
substance.
John Smith : But how ever can they find out the weight of
the water, sir ?
Mr. Bullion : In this way. Let me suppose that you have a
small cube of gold, and that you wish to find out its specific
gravity. You bring it to me, and I lend you a very delicately
adjusted balance, with an open wire-work scale in which to
place your gold cube. (I hope you would take care of mybeautiful little scales, if I were ever soft-hearted enough to lend
them to you, my boy !)
John Smith (eagerly) : Of course I should, sir
!
Mr. Bullion : I daresay you would but it is only a case of
supposing now, as my scales are reposing safely in my drawer at
home. Well, I next send you off to the nearest chemist's for a
bottle of distilled water, and we warm this to a temperature of
about 60° : we can easily test it by placing a thermometer in it,
you know. Now comes the weighing process. First weigh the
cube very exactly, and make a note of its weight. Then im-
merse the wire-work scale, gold cube and all, in the distilled
water; balance the gold very carefully under water, and you
will find it will weigh a good deal less than it did out of the
water. Subtract the lighter weight from the heavier one, and
divide the first or heavier weight by the difference : the result
will be the specific gravity of your gold cube.
John Smith : Thank you so much, Mr. Bullion ; but I must
confess I do not see how the thing works.
Mr. Bullion : In this manner : when your gold cube is put
into the water, it takes the place, does it not, of a body of water
exactly equal in bulk to itself ?
John Smith : Yes, I suppose it must do so.
WHAT IS IT ? 39
Mr. Bullion : Very well, then, the weight lost by the immer-
sion in water of your gold cube is the weight of a quantity of
water equal in bulk to the solid cube which has taken its place.
Therefore you can compare the weight of your cube of gold
with that of an equal volume of water ; and when you read
that the specific gravity of gold is 19, and of silver 10£, you
know that gold is 19 times and silver 10| times as heavy as
water.
John Smith ; Thank you, sir ; I see it much better now.
But what is the use of finding out the specific gravity of metals
when they are bought and sold according to their real weight ?
Mr. Bullion : You must know as well as I do that there are
tricks in every trade ; it is highly desirable to be able to dis-
tinguish easily between a precious stone, or a metal, of great
value, and those cheap imitations of them with which persons
have so often been taken in. By knowing the specific gravity
of these substances a jeweller would most likely be able to
detect at once the difference between a precious stone and a
piece of well-cut coloured glass, for instance ; or between fine
gold and a good imitation of it-.
John Smith (rubbing his hands together gleefully) : As soon
as we get home again I shall be able to try all sorts of jolly
experiments in this way.
Mr. Bullion: If you do so, you must have the patience to
learn to weigh all solid substances with the most minute exact-
ness, for finding out the specific gravity of a solid is a very
delicate operation. The shape of the substance you want to
weigh makes all the difference, even. A small, compact, solid
—like a cube or a well-formed crystal—will be found to possess
a higher specific gravity than the same substance in. a larger
less compact form. For this reason it is usual to give both the
highest and lowest specific gravity of any particular species.
John Smith : I remember having met with the two numbers
in some of my books. But it will be very interesting for me to
try some experiments at home, sir, won't it ?
Mr. Bullion : I believe it will be just the sort of study you
will delight in, John. But see ! we are fast approaching our
destination. Yonder distant haze is the north-east coast line of
South America. I must finish what I have to say about the
metals as quickly as possible.
40 COIN OF THE REALM:
John Smith : I feel quite off my head at the thought of our
heing only an hour's journey or thereabouts from America.
But go on, please, sir, I want to learn all I can before we get
there.
Mr. Bullion : It will not take me half an hour to finish
telling you about those metals of which our British coins are
composed. After that, our whole thoughts and attention shall
be given to the country below us.
John Smith : That will be jolly ; and, meanwhile, attending
to what you are saying will make the time pass quickly.
Mr. Bullion : First, I must explain to you that metals are
taken from the earth in two different conditions ; they are foundGold the only either in a native, that is, metallic state, or else so blended with
found in a other minerals as to be deprived for the time of their distinctive
metallic character. Gold is the only metal that is always found
in a metallic state ; silver and copper are sometimes found
native ; tin and zinc never so.
John Smith : What ever are they like, then, when discovered 1
Mr. Bullion : They are often so unlike themselves that only
a practised eye is aware of their being hidden away in the
earthy or mineral ore which contains them. You must make no
mistake as to the meaning of the word " native," however. Gold
is very often found alloyed with silver and other metals, or it is
embedded in quartz and other rocky substances, which have
to be crushed before the metal can be extracted. At other
times, also, gold is quite hidden in earthy ore, throughout which
it may be scattered in minute particles. But, in all these con-
ditions, gold is easily separated from other metals and minerals
by the use of chemicals.
John Smith : I am greatly puzzled, sir. If gold is found
hidden in the midst of other things, how can it be properly
called native ?
Mr. Bullion : I can explain this to you by reminding you of
that delicious cake we made the other day. You will remember
that I attended to the dry ingredients, whilst you looked after
the wet ones. First, I stirred into the flour some baking
powder, sugar, ground spice, and powdered almonds ; whilst
you beat the eggs, together with some milk and warmed butter.
Before your mixture had been added to mine, the dry ingredients
were just themselves—the flour was still flour ; the sugar, sugar
;
metallic
stato
Metalshidden in
mineral or
earthy ore.
WHAT IS IT ? 41
and so on ; although I should have required some knowledge
of chemistry to have been able to separate any one ingredient
from the rest. But as soon as you had poured your wet mixture
upon my dry one—I vigorously stirring them together the
while with my wooden spoon—the nature of the dry ingredients
began to be affected by the acid contained in the baking powder
;
and, by the time the cake had been well baked, the character of
some of its original ingredients had been considerably altered.
To apply this to the ores. Gold, when alloyed -with other metals,
or hidden in earthy soil, does not lose its individual character
any more than flour does when mixed with other dry ingredients.
But silver, copper, tin or zinc are often blended with sulphur,
antimony, arsenic, and many other mineral substances, which
act upon these metals chemically so as to deprive them of their
metallic character, as much as the eggs, the baking powder, and
the heat of the oven changed the conditions of some of the
ingredients of which our cake was composed.
John Smith : That is as plain as possible now, thank you,
sir. But does gold never get mixed up with sulphur or anything
of that kind 1
Mr. Bullion: Gold is an indestructible metal, and neither Gold and tin
t i i • i , . . „ . unaffected bysulphur nor any other mineral substance deprives it of its water or air.
metallic nature, as they do other metals. Then, again, most of
the metals gradually decompose, or become eaten away with
rust if exposed to air or moisture ; but it is not so with gold or
tin. Gold is unaffected by the influence of either element, and
the rust of tin does not wear the latter metal away. Whengold or tin are found in river beds, or in any alluvial de-
posit, they are unaccompanied by other metals, which seems
to be most reasonably accounted for by what I have just told
you.
John Smith : You mean that the other metals were probably
there when the soil was first washed off the rocks, but that they
have gradually disappeared since, owing to the dampness of the
soil ?
Mr. Bullion : That is it. Change of climate does not suit
every constitution. The metals had been resting in a high anddry situation, carefully protected from air and moisture, for
many a long year. When, therefore, they were violently sweptby floods of water into the valley beneath them, and deposited
42 COIN OF THE REALM
:
in a damp situation, only the strong ones survived such treat-
ment. It wore out the constitutions of the weaker metals.
?l
.
m*rie
j
in But now I am going to put a question to you, John. Can you
and silver are tell me in what countries gold, silver, copper, and tin arefound - found?
John Smith : Gold and silver are found in North and South
America. Gold is also found in Australia ; but I am not so sure
about silver.
Mr. Bullion : Yes ; silver is also found in Australia.
John Smith: And I know there are African gold mines,
because people talk of Guinea gold. As to copper and tin, you
can get plenty of them in our own old England. That is about
all I can remember about metals.
Mr. Bullion : Then I can show you a list of the countries in
which gold and silver are produced, which will enlarge your
mind considerably. Just read that (and he handed a paper to
John).
John Smith (reading aloud) :" Gold and silver producing
countries of the world, taken from the report of the director of
the Mint, U.S.A., 1885 : United States. Russia, Australasia,
Mexico, Germany, Austria-Hungary, Sweden, Italy, Turkey,
Argentine Republic, Colombia, Bolivia, Chili, Japan, Peru, and
Great Britain." That is a goodly list ; but you don't mean to
say that gold is found in our own United Kingdom now, sir?
Mr. Bullion : It is, indeed ; but not in sufficient quantities to
repay the expense of working it, Finish reading your list
and then we will talk about it. Those countries whose names
you have already read produce both gold and silver.
John Smith : Then here are the names of the countries where
only gold is produced (he reads) :" Brazil, Africa, British
Columbia, and Venezuela ;" and " Norway, Spain, and France "
produce silver only. I did not know that a quarter of those
countries produced metal.
Mr. Bullion : In some few of the countries you named, the
gold and silver are found in small quantities accompanying less
valuable metals, such as lead, copper, .or tin. For instance,
grains of gold are found by the Cornish miners in the tin
streams, and are carefully preserved by them in quills. A good
deal of gold was formerly found in various parts of Wales, and
some tine specimens were produced there. I am told that even
WHAT IS IT ? 43
now there are some rich gold mines known to exist in Wales,
but the gold they contain occurs in the shape of nuggets, and
the miners so easily make away with these, that the landowners
cannot afford to work the mines in consequence, and they are
closed.
John Smith : What a pity that this cannot be prevented
!
I'd have them all searched before they left work, wouldn't you,
sir?
Mr. Bullion : It seems odd that the difficulty cannot be over-|£iner3
'
come. But it is wonderful what ingenious tricks men will be up tricks.
to for the sake of stealing the precious metals. At one place
gold was found mixed with a very fine, black sand, and the
miners used to blow the sand off the gold in their impatience to
get at the latter. An old man took advantage of this habit of
theirs : he pretended that he was too lame to toil at the mines,
but was earning what he could by selling the black sand for
emery powder. So this old rascal requested the miners to blow
the sand into a tin tray with which he provided them, and he
used to come round of an evening to fetch his sand and carry it
off to his hut. When safely at home, he managed with the aid
of quicksilver to extract double as much gold from these black
sands as was obtained from them by the hardest-working man.
John Smith : The old wretch ! I only hope that he was
caught at last.
Mr. Bullion : That I cannot tell you. Another trick, prac-
tised by some Indians at the silver mines of Pasco, in Peru,
was as follows : A good deal of silver was found in a dark,
powdery kind of ore ; so the workmen used to take off their
clothes, moisten their bodies all over with water, and then roll
in the powdery ore, which, of course, stuck to their skins. They
then dressed themselves and went on with their work ; but on
their return home of an evening, they used to wash the silver
dust off, and afterwards sell it.
John Smith ; Well, I never heard of such a thing ! But how
uncomfortable they must have been, and hot too, with that coat
of dust about them whilst they were working.
Mr. Bullion : I do not suppose they disliked it as much as
you and I should. But their trick was at length discovered,
and they were all obliged afterwards to strip before leaving
work.
44 COIN OF THE REALM
Copper mines.
Tin mines.
Tin neverfound native.
John Smith : Serve them right, too !
Mr. Bullion : There are plenty of copper mines in England,
and a good deal of copper is also obtained from other European
countries, as well as from Asia, Africa, Australia, and the two
Americas. Now and then, copper is found native, and in very
large masses. One piece, found in Canada, measured fifteen
feet in circumference.
John Smith : Fifteen feet ! "Why, it must have required a
team of horses to raise it, I should think !
Mr. Bullion: The greater quantity of copper, however, is
found in all kinds of ores, one of the commonest, copper pyrites,
being a combination of copper and iron, and a large portion of
sulphur.
John Smith : I cannot yet grasp the idea of these metals
being found in a non-metallic state.
Mr. Bullion : Well, you shall have every opportunity of
becoming familiar with the idea before we bring our balloon
trip to an end.
John Smith : It is very jolly indeed of you, Mr. Bullion, to
take me about like this ; it will be something to remember all
my life.
Mr. Bullion : We must stop talking now, for we are bearing
down towards Panama rapidly, and I want you to observe the
country as we approach the shore. Tin, as you know, is
chiefly produced in Cornwall, but it is found also in other parts
of Europe, and in Asia, Malacca, Banca, and Australia. As I
told you before, tin is never found native; it occurs in the
oldest rocks, spread about in crystals through their mass, or in
veins, and is then called mine tin ; but when found in alluvial
deposits it is called stream tin.
John Smith : Oh, Mr. Bullion ! I do believe I can see a lot
of people down yonder !
Mr. Bullion : We shall startle those good people in another
quarter of an hour by descending in their midst ; so let us enjoy
ourselves while we can.
WHAT IS IT? 45
Chapter V.
Several days have elapsed since the last recorded conversation Route from
took place between Mr. Bullion and John Smith. After spend- California.
ing a night at Panama they ascended from the western side of
the isthmus ; and as soon as the balloon had risen sufficiently
high, steered out over the Pacific Ocean. Their route lay in a
north-westerly direction, past the western coasts of Costa Pica,
Nicaragua, Salvador, Guatemala, Mexico, and the lower part of
California, until at length they came in sight of the big city of
San Francisco, with its beautiful bay, and its grand background
of hill country. Mr. Bullion had decided that they should pass
a couple of nights here, in order that they might devote one
whole day to sight-seeing ; so they steered inland, and, having
been observed by some of the inhabitants a short while before,
descended into the midst of a considerable crowd just in front
of the arched entrance of the Palace Hotel. This hotel is said Palace Hotel,
to be the largest in the world, and certainly John was very much ^an.
impressed with its central glass-covered court, and the big
galleries running round it, one above the other, to which they
could ascend at all hours of the day by means of a lift.
On the second morning after their arrival, Mr. Bullion and Mr. Verdigris
John started at a very early hour for the mining district todistrict"
111118
which they were bound ; they reached their destination in the
course of the afternoon, and were warmly and heartily received
by Mr. Verdigris, the general manager. Both he and the men
working under him had been watching for many days with no
small amount of curiosity for the arrival of the balloon ; as soon,
therefore, as she hove in sight, a signal was given, and the
whole party of miners turned out to see them alight.
Mr. Bullion and John found themselves placed in a delight- Mr. Bullion
fully independent position. They were the guests of Mr. g!^ ith°
g
n
Verdigris by day, and at night slept at a little shanty close to quarters,
the mine-office. Moreover, they were to be free of the mines
whenever the manager was too busy to accompany them on
their rounds.
It would be impossible for me to describe at full length all
that our two travellers saw during their visit to Mr. Verdigris
;
46 COIN OF THE ItEALM
Descriptionof gold andsilver miningin quartzrocks.
Sinkingshafts.
Adit level.
1 will therefore only repeat the conversation that took place
between Mr. Bullion and John Smith after they had retired to
their own shanty, the night before they leave. California.
Mr. Bullion : Well, John, I hope you have been interested
in all that you have seen during our stay ?
John Smith : It has been ail so new and interesting, sir, that
I am quite afraid of forgetting some of it before I have hadtime to write it down.
Mr. Bullion : Do you feel wide awake enough to give me a
description of gold mining so far as you can remember it, before
turning in to-night ? If so, come along : you shall make a pot
of coffee whilst I smoke my last pipe.
John Smith : That will be jolly, for I don't feel a bit like
going to sleep yet. (As soon as they were settled, the following
conversation took place) :
—
John Smith : Let me see : first comes digging down into the
ground and sinking the shafts. My word ! what hard work it
is, breaking up that rocky ground. The men need to be paid
well for it, I am sure !
Mr. Bullion : I thought Mr. Verdigris exercised good judg-
ment in taking us first down into the valley, and showing us
the entrance to the adit level. You saw the use of it, didn't
you?
John Smith : Yes, quite well. The miners first dig into the
rocky ground, and sink a shaft ; then they go into the neigh-
bouring valley, and tunnel into the side of the hill till they
meet the hole of the shaft, and there they cut through the mineral
vein as low down as possible. This tunnel is called an adit
level ; it serves two purposes, viz.— (1) for the drainage off of a
good deal of water, and (2) for the removal of the ore.
Mr. Bullion : I think you told me that even in the adit level
the pumps are obliged to be kept at work ?
John Smith : Yes, the steam pumps are constantly at it,
because the shafts are in some places sunk ever so much below
the level of the adit ; but there, you see, it saves a great deal of
labour if the water has not to be pumped up to the surface of
the high ground. I wish you had gone down into the mine
with me, Mr. Bullion.
Mr. Bullion: I have been down into a mine more than once,
John, and I confess I am not anxious to repeat the performance.
WHAT IS IT ? 47
But I am very glad you went down ; it must have given you a
better idea of it than all the telling could have done.
John Smith: It was great fun. You know, besides the
proper adit level, there are short galleries leading from the big
shaft into the hill at all sorts of different levels. These passages
cut across the mineral lode, and by their means the lode can be
worked ever so much more quickly than if only one set of mendug down to it from above. I went into several of the galleries,
and found men hard at work in each of them ; all that they dig
down is sent up the shaft in buckets, and it is wonderful howeasily they know which lumps of earthy or sparry-looking stuff
are likely to contain ore, and which may be thrown away with
the rubbish.
Mr. Bullion: I have been told that the miners judge a gooddeal by the heft or weight of each lump.
John Smith : Yes, so the men said ; and by the look of it Dressing
too, sometimes. Quite close to the mouth of the shaft are thefloors -
dressing floors, where the lumps containing ore are knocked to
pieces with hammers, and separated more carefully from the
rubbish before being sent on to the crushing mills.
Mr. Bullion : I did not visit those mills, but I suppose the
ore is there prepared for the stamping which you and I saw ?
John Smith : Yes, they have huge cylindrical rollers of cast- Crushing,
iron, moving in opposite directions, which crush the ore intost
r*™i
>
-
1
n
lg'an
smaller pieces than they can be knocked into by hand. These mills,
small fragments are passed on to the stamping mills to be crushed
even smaller, and sometimes they have still to be sent to a
grinding mill and reduced to powder before the metal can be
thoroughly separated from the ore.
Mr. Bullion : What immense force those stamping machines
bring to bear upon the ore, do they not '?
John Smith : They do smash it up, and no mistake ! A mantold me that the pestles which were doing the stamping weighbetween three and four hundred pounds each. Those we sawwere made of iron, but sometimes wooden pestles with iron
heads are used. They are set in motion either by steam or water
power ; I suppose by whichever of the two can be most easily
worked at each particular mine.
Mr. Bullion : Do you think you understood the process that
the powdered ore was undergoing in the water ?
48 COIN OF THE REALM
:
The treat-
ment of
powderedores.
Use of
reservoirs.
Goldwashing.
John Smith : I didn't take it in the first time ; but when you
and Mr. Verdigris were gone, I went back and got a fellow to
explain the whole dodge to me. Underneath the iron pestles
which smash the ore there is a big wooden trough, which has
openings fitted with perforated sheet-iron strainers. A stream
of water is kept flowing through the trough, which carries the
ore down through the strainers, and over an inclined table
Upon this table, which is kept moving by means of chains at-
tached to the machinery, the heavier and richer pieces of ore
collect, whilst the lighter particles are washed away into
reservoirs.
Mr. Bullion : I expect a good many small particles of metal
get washed away during the process.
John Smith : Yes, sir ; but that is the beauty of letting the
stream run into reservoirs. The particles containing metal sink
to the bottom of the tanks, owing to their greater weight ; and
after separating themselves in this manner from the lighter
earthy ore, they are easily secured and made use of.
Mr. Bullion : So far you have had no difficulty in remember-
ing your mining experiences.
John Smith : That comes of your allowing me to give them
to you " hot from the book," as I might say. Going over it
to-night will refresh my memory famously. Do you know where
I have been to-day, sir 1
Mr. Bullion : I have not a notion ; but I did not feel any
anxiety on your account, having seen you collar an excellent
luncheon for yourself from the breakfast table this morning.
John Smith : Ah, yes;you see, I require keeping up whilst
I am going in for such hard study. One of the clerks told methat he should have to visit a place some miles off to-day, where
gold diggings were being carried on in a river bed. He asked
me if I should like to go with him, and I jumped at the offer,
as I wanted to see what gold washing was like.
Mr. Bullion : That was capital ; I have never seen the cradles
worked myself, although I have often read descriptions of the
process.
John Smith : Well, then, I believe I can explain it all to you
in first-rate style. Of course, you know as well as I do that the
gold taken from the gravelly soil of river beds is found either in
the shape of dust or particles, or else in nuggets—mostly small
WHAT IS IT ? 49
ones, though very big lumps have been found from time to time.
To separate the gold particles from the earthy matter, a machine Cradle
called a cradle is used. To rock the cradle is a more serious rocklnS-
undertaking where gold is concerned than if a baby were in it,
for it takes four men to manage each cradle properly ; all the
same, I'd rather rock gold than babies !
Mr. Bullion (laughing) : I daresay you would, and I am sure
the babies would rather you should do so !
John Smith : Don't you believe that, sir ! but, at all events,
the contents of a Californian cradle would suit me better than
the domestic article. The gold washer's cradle is a great wooden
trough, six or seven feet long, with two rockers underneath it,
just like a baby's. Some of these cradles rest on the ground,
whilst others are swung ; but in either case one end has to be
lower than the other, so as to let the water run off. The four
men at a cradle are employed in this manner : One digs the
sand, the second shovels it on to a grating or sieve at the higher
end of the cradle, a third does the rocking, and a fourth keeps
up the supply of water and attends to the proper washing of the
sand.
Mr. Bullion : I have seen pictures of cradles, and they all had
bars at the bottom. I suppose they are put there for some
purpose ?
John Smith : Yes, I forgot them just now. The wooden
bars which are fitted into the bottom of each cradle help to
catch the heavier particles, and to prevent their being washed
overboard.
Mr. Bullion : In some countries—Hungary, for instance— Gold
the auriferous (or golden) sands are washed upon inclined 2^*°^ 2"nd
planks. The Bohemians use a plank with twenty -four grooves Bohemia,
cut in its surface ; they place the sand in the first, or top groove,
hold the plank in an inclined position, and pour water over it.
The gold, being heavy, collects with a little sand towards the
bottom groove ; it is then placed in a fiat bowl, and when stirred
in water with a peculiar motion of the hand, the sand entirely
separates from the metal.
John Smith: That is very much like what they do in Brazil. Brazil.
The clerk told me that the negroes do the gold-washing there,
and use wooden bowls instead of cradles. They wash the sand
over and over again in their big wooden bowls, and gradually
4
50 COTN OF THE REALM
Sulphurets.
Amalgama-tion.
stow away the gold dust which it contains in leather bags, which
they wear fastened in front of them. I believe the cradles are
mostly used in Australia and California.
Mr. Bullion : Then there are some ores called sulphurets,
because they contain a good deal of sulphur. The sulphurets of
silver, arsenic, and iron, although often very poor in metal, mayyet contain a small proportion of gold which, with careful treat-
ment, can be extracted with profit. Sometimes the gold is
separated from them in this manner : The ores are first roasted,
to free them from the sulphur, ; then they are melted into what
are called mattes, which are again roasted, and next fused (or
melted) with lead. By this plan an auriferous lead is obtained,
which can be refined by a process called cupellation. When ores
are very rich in gold they are melted directly with the lead,
without being roasted.
John Smith : I know nothing about cupellation.
Mr. Bullion : I will give you a full description of it in its
proper place. But there is another and better method of
separating gold from its ores, called amalgamation, which is
practised wherever quicksilver is obtainable. I suppose you did
not see anything of it yesterday ?
John Smith : No ; but the clerk had visited some districts
quite lately where it is done, so he took the trouble to explain
the process to me. A lot of small lumps of quartz are placed in
a circular stone trough, and several pounds of mercury are
poured upon them. Then a heavy circular stone is set going,
which grinds the quartz to powder, whilst a stream of water is
kept trickling through the trough, and flows over a particular
spot, carrying with it the finer ground earthy particles. Four or
five goatskin bags, each containing quicksilver, are hung one
below the other beneath the falling stream, so that the water and
earthy particles are caught in the top bag, and whatever is fine
enough to be carried through it passes down into the bags below.
Gold has a great affinity for quicksilver or mercury ; it readily
gets mixed—or amalgamated as it is called—with it. By the
time the stream and its contents have trickled through these
four or five bags, most of the gold has become amalgamated
with the mercury contained either in the trough or in one or
other of the bags.
Mr. Bullion : That is certainly a very clever way of collecting
the gold.
WHAT IS IT ? 51
John Smith : "When the mill has been working for several
hours, all the quicksilver is collected and put into a narrow linen
bag, and the uncombined mercury is squeezed out of the bag,
leaving the amalgam of gold behind.
Mr. Bullion: You have quite turned the tables upon meJohn, by becoming my instructor. I never before heard of the
process which you have just described so well.
John Smith : The clerk says it is only one of many ways of
separating gold from other ores, and that various kinds of
apparatus are employed for this purpose. He told me that in
1853, when there was such a rush for the gold-diggings, a Mr.
Burdon of New York, invented a very clever machine, now well Burdon'sgold
known as " Burdon's gold ore pulverizer and amalgamator." ore pulverizer°
.r & and amalga-
But, would jou like me to finish my story by telling you how mator.
the gold is got out of the amalgam, sir 1
Mr, Bullion : Tray do ; I shall like to hear that.
John Smith : The combined gold and quicksilver, commonly Separating
known as the " amalgam," is placed upon a piece of iron strongly !g<
j7
heated and resting on a brick which is standing in water. The amalgam,
whole is covered with a cup, called a " cupola," which forms a
water joint at its bottom edge and keeps out the air, whilst the
neck of the cupola dips into a vessel of water. The heat of the
iron plate drives the mercury out, and it becomes condensed in
the water, leaving a spongy mass of gold upon the iron plate.
Mr. Bullion: I quite understand. And the condensed
mercury need not be wasted, for it can be collected for further
use.
John Smith : Yes ; so the clerk said. I wanted very much
to know how the gold is made up ready for use after being
separated from the amalgam, but unfortunately he could not tell
me that.
Mr. Bullion : Well, I am glad to say I can give you that Gold made
information. A crucible—that is, a pot made of plumbago FJ'
"? °
(black lead) is first heated in a furnace ; then the gold is put
into it, with some dried borax, and the heat is kept up until
the gold is melted, when the coarse impurities, called slag, rise
to the surface and are skimmed off. The metal is poured into
ingot moulds which have been warmed and greased, and whencold the ingots are ready to be sent to the assay office or mint.
An ingot, I should tell you, is a block of metal very much bike
to New York.
52 COIN OF THE EEALM
:
a brick in shape. But no more talking to-night, if you please;
it is getting very late, and to-morrow we set forth upon our
travels again.
John Smith : Just tell me before I go, please, sir, what we
are to see next. I shall not sleep a wink if you don't tell me
that
!
Mr. Bullion (laughing) : I will answer for your not lying
awake when once you lay your head upon your pillow ; but I
Proposed trip wjH satisfy your curiosity. "We shall start to-morrow morning
on a balloon trip to New York, accompanied by Mr. Verdigris,
who intends to visit with us the Assay Office, and get leave
for us to be let into all the mysteries of parting and refining gold
and silver bullion.
John Smith : How delightful ! But I do not yet know any-
thing about the separation of silver from its various ores.
Mr, Bullion : Mr. Verdigris thought of that; but he says he
will explain it fully to you during our journey. You must
recollect we shall have plenty of time for talk, for we have to
make our way right across the United States, from extreme
west to extreme east, and shall probably be many days doing
so, even if the weather is favourable. Now go to bed at once,
or you will never be ready to start at seven o'clock to-morrow
morning.
Chapter VI.
The balloon The next morning proved very fine, and a large party of
starts. miners, with their wives and little ones, had collected long
before seven o'clock to see the balloon go up. She ascended
in fine style, and, having risen steadily to the required height,
sailed majestically off in an eastward direction, followed by the
cheers of the assembled party. Mr. Verdigris felt by no meanscomfortable when he first found himself suspended in mid-air,
but both John and Mr. Bullion seemed so perfectly at home in
the latter's aerial carriage that by degrees his nervousness wore
off, and, after he and Mr. Bullion had enjoyed a smoke together,
WHAT IS IT ? 53
lie was quite ready to have a chat with John Smith about the
treatment of silver ores.
Mr. Verdigris : What do you know about silver ores, John ?
Just give me an idea, that I may know where to begin.
John Smith : Only this : that silver is rarely discovered in a
native or pure condition, and is often hidden in a non-metallic
state in its different ores.
Mr. Verdigris : That is quite true. There are a great many Silver ores,
different mineral ores from which silver may be extracted , but
the principal silver ores properly so-called are : Native silver,
vitreous silver or silver glance, black silver, red silver, and horn
silver. Besides these, there are sulphides of lead and copper,
from which small proportions of silver are obtained, and the two
ways in which silver is extracted from its various ores are—(1
)
smelting, and (2) amalgamation.
John Smith : I am never sure that I understand what is
meant by smelting, although I know the process has something
to do with furnaces.
Mr. Verdigris : To smelt ores is to extract the metal from Smelting,
them by means of heat. Smelting is called the dry method,
whilst amalgamation is known as the wet method of treating
ores. The former is practised chiefly on the argentiferous (or
silvery) sulphides of lead ; the ore is first roasted and reduced
to powder so as to expel the sulphur, after which it is ready
for refining and cupellation.
John Smith : Gold is treated very much like that some-
times ; but I have yet to learn the meaning of cupellation.
Mr. Verdigris : You shall see the process with your own eyes Amalgama-
when we get to New York. Amalgamation is a very compli- tl0n '
cated process as far as silver is concerned ; the ores best suited
to this treatment are native silver, and vitreous silver. First,
the ores have to be selected, so as to form a proper mixture
as to the silver and sulphur they contain. It has been found
that this process succeeds best where about seventy-five ounces
of silver are produced to the ton of ore, and regard has also
to be paid to the quantity of sulphide present, which it is the
business of the assayer to find out beforehand. The sulphur
is got rid of by adding to the mixture of raw ore ten per
cent, of common salt, and in the furnace operations which
follow, the sulphur is oxidised by the salt, and the acid thus
54 COIN OF THE KEALM
To oxidise.
Furthertreatment of
silver.
formed, uniting with the base of the salt, forms sulphate of
soda ; whilst the hydro-chloric acid thus set free combines with
the silver in the ore that was not in a metallic state, and forms
chloride of silver.
Mr. Bullion: All that is rather a tough nut for John to
crack.
Mr. Verdigris : Try how much you can remember before
I go further ; I will answer for it, you will soon master the
particulars.
(Accordingly John did his best to repeat what had just
been related to him, and with very little prompting from Mr.
Verdigris, succeeded most satisfactorily.)
Mr. Verdigris (turning to Mr. Bullion) : John knows more
about it than you gave him credit for, eh ?
John Smith: I used a word that I did not understand
—
oxidise.
Mr. Verdigris : A metal is oxidised when it becomes encrusted
with a kind of rust or film, oxide being a rust which is formed
by the action of a gas called oxygen upon metal. And now I
think you will easily take in all that I can tell you about the
process of amalgamation, especially as you understand the prin-
ciple of it already. After the ores have been submitted to the
furnace, you must imagine that we have to deal with a mixed
ore made up of sulphate of soda, chloride of silver, and other
metallic and earthy ingredients. This ore goes through various
mechanical operations with riddles, mills, and sieves, until it is
reduced to a very fine powder, and fit to be submitted to the
action of mercury.
John Smith : I had no idea that the finding and preparing
of silver was such a business.
Mr. Verdigris : It does seem a lot of trouble, but machinery
saves a good deal of labour now-a-days. To form the amalgam,
a number of barrels are each charged with certain knownproportions of sifted calcined ore, mercury, metallic iron, and
water. The barrels are made to revolve by machinery upon
their own axes for sixteen or eighteen hours, during which
time the chloride of silver becomes decomposed by the action
of the iron, and produces chloride of iron and metallic silver.
The silver combines with the mercury and forms an amalgam,
whilst the sulphate of silver, the chloride of iron, and other
WHAT IS IT ? 55
salts, are dissolved in the water. The combined mercury and
silver is then filtered, by which process the surplus metal is
separated, and a compound remains consisting of six parts of
mercury and one of silver. This amalgam is subjected to the
action of heat, by which means the mercury is sublimed, that
is, extracted by heat, and the silver remains.
John Smith : What a very elaborate business, to be sure !
But it is most interesting to be told all these particulars ;thank
you so much, Mr. Verdigris, for explaining everything so
clearly.
Mr. Bullion : And now, John, it is high time you and I set Some more
about shewing Mr. Verdigris what skilful cooks we have become y "
since we set forth on our travels together. We are going to
operate on some lamb chops and tinned tomatoes directly, so
light up the stove, there's a good fellow. (Mr. Verdigris was
much astonished at the tasty luncheon provided for him by Mr.
Bullion and John ; the former fried some breaded lamb chops,
whilst John made as good a preparation of tomato sauce as any-
one could wish to partake of. There were boiled potatoes also;
and bread and cheese, biscuits, and butter to finish up with.)
Mr. Verdigris : You have given me such a luncheon as I
never expected to enjoy in a balloon; in fact, I brought
plenty of tobacco with me in case I found that we were short
of victuals.
Mr. Bullion: I cannot promise you fresh meat at every
meal, but I hope you will discover that we do not go in for
fasting up here.
John Smith : No, that we don't ; I grew quite fat on myoutward voyage, what with good living and having no chance
of running it down.
Mr. Verdigris : I have so little more to say that I think wemay as well give ourselves up to the enjoyment of scenery
this afternoon, and postpone the rest of our " silver " talk until
to-morrow morning.
Mr Bullion : A capital suggestion ; the morning is always
the best time for head-work. But, if you will take my advice,
John, you will make notes of Mr. Verdigris' morning lecture
in the course of the afternoon.
John Smith : All "right, sir, so I will. (The remainder of
the day was spent by our travellers in rest, enjoyment, and
56 COIN OF THE REALM
Pattinson'a
process of
extracting
silver fromlead.
Cupellation.
in observing much that was going on below them. The next
morning when they had breakfasted, and the two elder gentle-
men had smoked their first pipes, Mr. Verdigris began as
follows) :
—
Mr. Verdigris : Did you ever hear of the Pattinson process
of extracting silver from lead ?
John Smith : No, I do not think I ever heard of it, though
I have often been told that a good deal of silver is generally
found in the lead ore.
Mr. Verdigris : Then I will give you a description of the
process, so called because it was invented and patented by the
late Mr. Pattinson, of Newcastle-on-Tyne. It is one of the
simplest and best plans that has ever been discovered. Imagine
nine cast-iron pots, each pot being about 6 ft. in diameter, and
having a fire underneath it. In the middle, or fifth pot, is
placed a quantity of lead containining about 10 ozs. of silver to
the ton, and called " original lead." Pure lead becomes solid
at a higher temperature than lead with silver in it ; therefore,
the lead and silver, when quite melted, are allowed to cool
slowly; the fluid metal is kept stirred, and as small portions of
pure lead become crystallised, they sink to the bottom of the
pot, and are ladled into the first pot on the right. The ladle
used for this purpose has holes in it, so that the fluid metal
runs through it, and only the solid bits of lead remain in it.
The metal which remains liquid contains silver, and is removed
into the first pot on the left. With both kinds of metal this
process is repeated, one becoming poorer and the other richer
every time, until the lead in the pot on the extreme righo has
hardly any silver left in it, whilst the pot on the extreme left
contains about 300 ounces of silver to the ton. This last metal,
called "lead riches," is cast into bars about 2 ins. square.
John Smith : How I should like to see it done !
Mr. Bullion : I daresay you will be able to do so when we
get back to England. I have read that nearly 600,000 ounces
of silver are in this way separated from British lead every year,
and, what is more, the quality of the lead is greatly improved
by the process.
Mr. Verdigris : All that is true enough. But now, Mr.
Bullion, I think you must allow me to explain to John the
process of cupellation, otherwise I cannot tell him how those
WHAT IS IT? Ot
bars of argentiferous lead that I have just been talking about
are finished off.
Mr. Bullion : By all means;you will do it a greal deal
better than I could.
Mr. Verdigris (politely) : That is not at all likely.
John Smith : By hearing about cupellation beforehand, I
shall take it in all the quicker if I am lucky enough to see the
thing done when we get to New York.
Mr. Verdigris : Certainly you will, so I will do my best to
make you understand it. The object of cupellation is the first
thing you must grasp. Copper, tin, and other inferior metals
readily oxidise, or absorb oxygen gas, when melted with lead,
whilst gold and silver have only a very slight affinity for oxygen.
The principle of cupellation, therefore, is to melt the gold or
silver ores with a proper proportion of lead, so that the inferior
metals contained in these ores may become oxidised and separated
from the precious metals. Do you follow me so far ?
John Smith : I believe I do, perfectly.
Mr. Verdigris : Now then—to describe to you the process
of cupellation, as it would be applied to the bars of lead riches,
of -which I was talking just now.
John Smith : The 2 in. square bars, containing a proportion
of 300 ounces of silver to the ton ?
Mr. Verdigris : Just so. The next thing to be done is to
extract the silver from the lead, and this has to be accom-
plished by means of cupellation, in the following manner
:
First, the metal has to be melted in a peculiar shaped dish,
called a test, or cupel, very much like a meat dish, its frame-
work being made of iron, and being covered with a porous
mixture of earth composed of burnt bones and fern ashes.
This porous coating sucks up a great deal of the oxidised
metal.
John Smith : "What a very odd mixture, to be sure ; burnt
bones and fern ashes
!
Mr. Verdigris : The cupel is placed in a furnace, so con-
structed that the heated air and flame pass over it and up the
chimney. This is managed by means of dampers, and a fur-
nace of this description is called a reverberatory furnace.
Great care has to be taken to prevent the cupel being cracked
by the heat, and when it is sufficiently hot, the lead riches,
58 COIN OF THE EEALM
which have been previously melted in a side furnace, are
poured into the cupel. At first, the surface of the metal gets to
look as if covered with dross, but very soon that clears off, the
surface of the melted lead increases, and a film of melted
litharge—that is, oxide of lead—appears, 'which sinks into the
cupel as into a sponge ; but when this is full, then a draught of
air is directed over the argentiferous lead, and as the cupel is
kept constantly filled with lead riches, the litharge collects on
the top, floats over the hollow part of the cupel, and is caught
in a pot beneath. Directly the last portion of lead is oxidised
and removed, the whole surface of the metal in the cupel
suddenly brightens up, and looks exceedingly beautiful. If the
silver were left to cool, it would take to spirting—that is, a
quantity of oxygen gas that becomes dissolved in the fluid
would explode ; but this is avoided by pouring water upon it
or by sprinkling the surface with powdered charcoal.
John Smith : Thank you so much, Mr. Verdigris ; it has all
been most interesting, and I am sure I understand it.
Eliquation. Mr. Verdigris : One other separation of ores I may as well
tell you of,—that called " eliquation," being the process by whichsilver is sometimes extracted from ores containing a good deal
of copper. Lead has a greater affinity for silver than for copper
;
therefore, a certain proportion of lead is melted with the silver
and copper alloy. The silver separates from the copper, and
forms a new compound with the lead, after which it can be
treated by Pattinson's process ; whilst the coarse copper from
which the silver has been separated is refined. You will learn
all about the treatment of copper when you turn your attention
to that metal.
John Smith : "Which will not be until we return to England,
I suppose. But will you kindly tell me another thing ; are the
gold ingots which are brought to the mint quite ready to be
made into money ?
Mr. Bullion : No ; they are not composed of sufficiently fine
gold to be fit for that purpose, John. "When we reach NewYork, you will see what further process they have to go
through.
Kefining. Mr. Verdigris : Both gold and silver are brought to the
mints and assay offices containing a considerable amount of
alloy, \mless they have passed through a private refinery first.
WHAT IS IT? 59
John Smith : Which is supposed to be the best plan,—to Government
take the metals to private refiners first, or to let the government v' Private
people do the refining business ?
Mr. Verdigris : In America, the greater part of the gold Gold bullion,
produced is brought straight to the government mints to be
refined, for the government do not charge any more for refining
base bullion, and parting gold and silver, than the private
refiners do, and most of the gold producers prefer dealing with
the institutions belonging to the governmental mint service, for
the sake of having their fine gold stamped with the official
stamp. This stamp, you see, is a guarantee that every gold
purchaser would accept for the fineness of the gold he is about
to buy.
John Smith : Suppose a gold producer does not want to have
back his gold when it has been refined, but would rather have
it turned into gold coins ?
Mr. Verdigris : In that case, he can receive the value of his
gold in coins, all except the small sum which is deducted for
refining. The government make no charge for converting gold
bullion into coin ; they will always allow depositors of gold
bullion to receive the value of their metal either in stamped and
refined bars, or in coin, whichever suits them best.
John Smith : That is very jolly of them. And does nearly Silver
all the silver find its way to the government mints also ?u 10n *
Mr. Verdigris : No, not anything like so much silver as gold,
because depositors of silver can only receive bars of unparted,
fine, sterling, or standard silver in return for their silver bullion
;
the government will not undertake to pay for silver in either
gold or silver coin. Silver containing gold—called " Dore Doregold
Gold "—is purchased at the mints, to be used for refining pur-
poses ; and the silver contained in gold deposits is always
allowed for at all the government institutions.
John Smith ; The depositors cannot complain if they can get
paid for the silver contained in their bullion ; but it is a curious
thing that they may only have silver bars, and not silver coins
in return for their deposits.
A few days afterwards the following conversation took
place
:
John Smith: What a vast extent of country we have
passed over during the last few days, to be sure ! Why I
60 COIN OF THE EEALM
Route fromCalifornia to
New York.
Silver Island.
should think we must have travelled at least 1,000 miles bythis time.
Mr Bullion : When we reach New York, which we hope to
do this evening, we shall have passed over more than 2,000
miles of country. It is lucky we have been able to let ourselves
down into civilised parts to take in provisions, or I fear weshould only have been fit for the crows to peck at by this time.
But now that our journey is nearly at an end, what do you
remember of the route, John ?
John Smith : I remember it all, sir, perfectly well ; I should
never have been such a duffer at geography if I had been allowed
to learn it by making balloon trips with you. I will give you
our route at once, in a very few words : Salt Lake City (of
Mormon fame), and over the Rocky Mountains, to Denver,
Colorado. Then across Nebraska State and River Platte to
Iowa City; across the Mississippi and Lake Michigan to
Detroit. From Detroit we went northward, so as to visit
Toronto and the Canadian lakes. Never shall I forget those
great tideless oceans ! Mr Verdigris says that Great Britain
could be put down into Lake Superior, and that even then
there would be a margin enough round it for heavy seas to rise
in a gale. And that reminds me—you never heard about the
silver island, did you ? It was told us by an old fellow at the
hotel at Toronto the evening that you were not very well, and
did not leave your room. I wish we had heard of it before
passing over Lake Superior, for we should certainly have looked
out for it.
Mr. Bullion : I was much puzzled by overhearing some
chance words about a "Silver Island," when you and Mr.
Verdigris were talking together last night, and I meant to
have asked you what it was all about.
John Smith : Let me tel I you now, sir. You know there are
not many islands in Lake Superior, and they are all near the
shores, so that there is a vast space of open water, and, being
fresh, the seas that arisj there are tremendous. There is, of
course, no tide, but in summer time the water falls a good
deal, rising again in the autumn and spring. One of the small
islands in this lake was a bright, silvery-looking rock whose
reef could be traced, shining through the clear water, to the
mainland. I do not know when its silvery appearance first
WHAT IS IT? 61
attracted attention, but at all events about twenty years ago a
Canadian company, without much capital, took possession of the
silver island and determined to work it. They made a dam
round the island at low water, but year after year the rising
water and heavy autumnal seas broke it away and nouded it
;
in fact, they could only work for a short time in each year, with
heavy expenses for repairs. Then the company lost heart, and
just at that time a smart Yankee appeared at Toronto, who had
evidently visited the island before, for he made a bid for it to
the Canadian company, which seemed so good that they closed
with his offer, stipulating only to be paid in cash. The Yankee
asked for a week, and at the end of that time he had organised
a small American company, who paid down a good round sum
to the Canadian company for the island. There were seven
men only, I believe, and our Yankee friend was, of course, one
of them.
Mr. Bullion (laughing) : "Well done, Mr. Yankee ! Those
sharp Americans always know where to lay their hands on menwith money, and ready for a good " spec."
John Smith: And a jolly good u spec." it was, I can tell you.
They set to work, made an outer and inner dam, each muchmore substantial than the Canadian one, and the result of the
first six months was that, after all the heavy expenses, including
buying 1,000 acres of ground on the mainland, where the reef
touched, they divided 20 per cent, on their capital
!
Mr Bullion : What a splendid success ! I should not think
the Canadian company liked it, though.
John Smith : No ; they were very sore to think that so good
a thing had been snapped up by the Yankees. But " let those
laugh who win." The hotel-keeper was able to tell us that the
silver island has by no means come up to its first brilliant
expectations ; indeed, I fear it has proved a disappointing
failure.
Mr. Verdigris: Look yonder, John: those houses nestling
in the hills are part of New York ; we shall be there in no
time now.
John Smith : We have passed over a goodly etretch of
country siuce the morning, haven't we ? Across Lake Ontario
and the Alleghany Mountains. It is so delightful to be inde-
pendent of mountains, lakes, rivers, and seas, as we are in this
jolly old balloon.
62 COIN OF THE REALM
:
Arrival at
New York.
Fifth AvenueHotel and its
surroundings.
In a short time the travellers arrived under Mr. Verdigris'
directions, right over a small pleasure ground situated in the
very heart of the city, and close to the hotel in which Mr.
Verdigris had engaged rooms for them. As usual, by the time
they came down a large number of people had assembled to see
them alight, and they were escorted to Madison-square by a
crowd of admirers, some of whom insisted on carrying the
balloon.
Fifth Avenue Hotel, where Mr. Verdigris had taken rooms
for himself and his friends, stands on the western side of
Madison-square. It has a white marble front, and it is quite
the handsomest of the many fine hotels situated in that part of
the city. After the travellers had dined and rested, they turned
out to have a look at their surroundings. Madison-square is
close to the union of the two most celebrated streets in NewYork City—Fifth-avenue, with its beautiful brown- stone man-
sions ; and Broadway, a splendid street, five miles in length,
full of fine shops, restaurants, hotels, and great business houses.
Brilliant electric lights added much to the effectiveness of the
scene, and the streets were crowded with people and vehicles
long after our three friends had returned to their hotel and
retired to rest.
Chapter VII.
Mr. Tizzy'sinvitation.
Mr. Verdigris : We must find our way to the Assay Office
this morning, John, before we go anywhere else, for I have had
a very kind note from Mr. Tizzy, the superintendent of the Assay
Office, inviting you to spend the morning with him, and to lunch
with him, after seeing all that is to be seen.
John Smith : How very kind of him ; but are not you and
Mr. Bullion coming too, sir ?
Mr. Verdigris : I have other business which must be attended
to ; so, as Mr. Bullion has already been let into the secrets of
the assaying process, he proposes accompanying me to another
part of the city as soon as I have introdiiced you to my friend,
Mr. Tizzy.
WHAT IS IT? 0<3
John Smith : I hope Mr. Tizzy will let me see everything.
Mr. Verdigris : You will find him a delightful companion,
and will probably get much more out of him by having him all
to yourself, than you would if I were there to discuss the money
market with him. Come along, both of you, as soon as you are
ready. My friend is an early bird, and we must not keep him
waiting.
(Very soon after breakfast Mr. Bullion and John were ready The Assay
to start, and Mr. Verdig-ris led them down Broadway-street until ° ffic° and its
, „ -rrr « \surroundings,
they reached the corner of Wall-street.
)
Mr. Verdigris : Here we are. Just observe what a collection
of great business houses are brought together at this corner.
That white marble building is the United States Treasury, with
the Assay Office alongside of it. Opposite is the Drexel building
and the Stock Exchange is close at hand.
Mr. Bullion : The Treasury is very fine ; a flight of steps
always gives an imposing air to a building.
Mr. Verdigris (pointing to a monument) : That is Washing-
ton's statue ; it stands on the very spot on which he was in-
augurated first President of the United States. But see, here
comes Mr. Tizzy. The top of the morning to you, sir; allow me Mr. Tizzy,
to introduce you to Mr. Bullion and Mr. John Smith.
Mr. Tizzy : Glad to see you, gentlemen, and very much at
your service.
Mr. Verdigris (laughing) : It is lucky you say so, Tizzy, for
I have desired John to pump you quite dry before he allows you
to leave the office to-day. This young friend of Mr. Bullion's has
come all the way from England in a balloon for the sole purpose
of studying mines and precious metals.
Mr. Tizzy : Dear me, you don't say so ! Then you must be
in earnest about your studies, and no mistake. Well, I shall
be proud to show you my department.
Mr. Verdigris : We will not detain you now, but I hope you
can come back with John, and dine with us this evening.
Mr. Tizzy : Thanks ; I shall have much pleasure (and
linking his arm within John's he drew him into his own private
room).
Mr. Tizzy: We are going to test some gold ingots this
morning, so you will be able to see the whole process. Ask as
many questions as you like ; to have an intelligent fellow like
64 COIN OF THE REALM
The duties of
an assayer.
Various uses
of gold andsilver.
Light coins.
you looking on, who wants to know all about it, will make our
morning's work more interesting than usual.
John Smith : That is a very kind way of putting it, sir. I amglad you do not mind answering questions, for I shall be sure
to think of lots that I want to ask.
Mr. Tizzy : Fire away, then ! I only hope you will not
manage to ask me anything I cannot answer. But first tell me,
do you fully understand the duties of an assayer 1
John Smith : I believe you have to test the ores, and I sup-
pose that is done just as a chemist analyses anything.
Mr. Tizzy : Not so. In a chemical analysis it is the business
of a chemist to find out every separate ingredient contained in a
compound mixture, and the relative proportions of each. Butan assayer need not do that ; his business is merely to find out
how much precious metal the sample of bullion brought to himcontains.
John Smith : I see. And is all the gold and silver you receive
here made into money ?
Mr. Tizzy : Oh, dear, no ! "We accommodate everybody whohas anything to do with the precious metals—miners, bankers,
jewellers, and all sorts. Anyone who brings us bullion—that is,
unmelted gold or silver—to the value of 100 dollars or more,
can leave it with us and receive payment for it. For gold wegive either gold coin or fine bars ; for silver we do not give coin,
but fine or standard silver bars. These gold and silver bars have
their weight and fineness stamped on them, and the gold bars
have also their value stamped upon them.
John Smith : I should have thought that people would always
rather have had money for their bullion than bars.
Mr. Tizzy : That depends on what they are going to use the
metal for. Now that jewellers and gold and silver workers can
get bars of the precious metals, a vast number of standard coins
are saved from destruction every year ; and this is a very good
thing, for you must remember the newest and best coins had to
be selected for melting down, whilst the worn coins remained in
circulation until some unfortunate persons were told that their
money was of light weight and could not be accepted.
John Smith : What did they do, poor things, when they could
not pass their coins ?
Mr. Tizzy : The only thing they could do was to take them
WHAT IS IT ? 65
to one of the mints, or to a money dealer, and sell them for as
much as they would fetch ; but they had to do so at a loss. Now,
come with me and take a lesson in assaying.
The next morning John related his experiences to Mr. Bullion
in the following manner :
—
Mr. Bullion : Well, John, and what sort of a day did you
have yesterday 1 Did it come up to your expectations ?"
John Smith : I never had such an out-and-out delightful
day before. Mr. Tizzy was as jolly as could be, and I saw
everything.
Mr. Bullion : That is right, then. Mr. Verdigris is obliged
to leave us to our own devices this morning ; so suppose you
begin at the very beginning, and tell me all that you saw and
heard described yesterday.
John Smith : That is just what I have been wanting to do
before I forget any of it, though I do not think there is muchfear of that—it is so much easier to recollect when one has
seen the real thing.
Mr. Bullion : To be sure it is ; that conclusion holds good
for other kinds of knowledge besides balloon trips and geo-
graphy lessons.
John Smith : Well, first I was shown some lumps of gold
and silver bullion which had lately been sold by a depositor
to the Assay Office, and Mr. Tizzy told me that the gold
bullion was going to be assayed, parted, and refined that very
day, so I was in luck's way, wasn't I ?
Mr. Bullion : You were, indeed.
John Smith : The bullion has always to be melted down q.o1(j an(j
before anything can be done with it. The gold bullion was silver bullion
melted in a crucible, and poured into iron moulds ; when cold,me
the bars of metal were turned out, and some small cuttings
taken from them for assay samples. The silver bullion has to
be melted also, but instead of being cast into bars it is carefully
stirred whilst fluid, and a small quantity of it is dipped up
and granulated by being dropped into cold water. Silver is
treated thus, because it is apt to segregate—that is, to get
separated from its alloys in little lumps whilst cooling, in which
case it would be very difficult to get a fair sample of the whole
5
GO COIN OF THE REALM :
Gold samplestested.
Cupcllation
of goldsamples.
Cupels.
melt. But the granulations taken from the stirred fluid are
very fair samples of the rest of the contents of the crucible, Mr.
Tizzy said.
Mr. Bullion : So I should imagine.
John Smith : After I had seen the gold bullion melted and
cast into bars, small samples were cut from these bars—little
bits of metal weighing only about half a gramme each—that
is, 7 1 grains ; in fact, everything seemed to be done on a
miniature scale ; the furnace used was only 1\ ft. high, and the
samples went through the process of cupellation in it. The
principle was the same as that described by Mr. Verdigris, when
lie was telling me about the treatment of silver ores, but the
things used were rather different. There was a curious-looking
clay box, called a muffle, in which were placed the little cupels
or cups, containing the assay samples. This muffle had its top
and three of its sides perforated, whilst the fourth side was left
open altogether, to allow of the cupels being put into it. The
holes in the top and sides of the muffle, I learnt afterwards,
were to let the heated air pass freely over the cupels.
Mr. Bullion : Did you happen to hear what the cupels were
made of ?
John Smith : Yes, and even how they were made. Some-
times phosphate of lime, which is really bone ash, is used, but
those cupels I saw were made of calcined cores of ox-horn. The
powdered ashes are mixed with just enough water to moisten
them, and pressed tightly into steel moulds ; then each cupel is
shaped, by a polished steel rammer being hammered violently
into the hollow of the mould until the moistened ashes have
become a solid, hard substance. The cupels when made are put
aside for several weeks to dry.
Mr. Bullion : Now that you know what the cupels are made
of, you can better understand their becoming porous when heated,
can you not ?
John Smith : Ever so much better ; I thought they were
made of solid metal before. The little assay samples were
placed each in its own cupel, with a certain proportion of
silver.
Mr. Bullion : And what was the silver for ?
John Smith : There must be more silver than gold in the
melt, to separate well the gold particles, otherwise the gold
WHAT IS IT ? 67
prevents the copper and other alloys from dissolving in the
sulphuric acid which is afterwards used. When the cupellation
business was completed, and the cupels had been cooled, there
was a small button of metal in the middle of each cupel. These Gold buttons
little buttons had to go through the further process of parting refined -
and refining.
Mr. Bullion : Did you see the fine gold produced from those
little metal buttons ?
John Smith : I did, indeed. Each button went through the
following treatment :—First, it was hammered out flat into a
ribbon, thin enough to coil round one's finger ; then it was
annealed—that is, made red-hot and cooled, which softened it,
for the hammering makes the metal too hard. When cold, it
was coiled up and called a " cornet." This cornet was boiled
two or three times in sulphuric acid, the acid being poured off
after each boiling, and replaced with a fresh lot ; this is done to
rid the gold of the silver it contains, for silver dissolves in the
acid, and gold does not. The cornet was next washed twice in
distilled water, to free it from the acid, after which it was once
more made red-hot, then cooled and very carefully weighed, to
determine the fineness of the gold. Having weighed the assay
sample at the beginning, you see, they were able to find out
how much of that sample was alloy.
Mr. Bullion : You certainly saw a very great deal in a
wonderfully short space of time.
John Smith : And all the times between, whilst we were
waiting for the metals to melt or cool, Mr. Tizzy was talking
away about all sorts of interesting things. He told me that a
chemist named Baume invented a very clever instrument called Baume'a
an "Areometer," for finding out the specific gravity of liquids.Are<
??ieter
>
* * ^1'
* 01' discover -
With the aid of this instrument, and by making very careful ing the speci-
calculations, they can determine as nearly as possible the pro- , .
gravity °*
portions of the different metals contained in an alloy, and bybeing able to do this, they also know how much metal of any
particular kind they must add to a melt to bring about the
required results.
Mr. Bullion : I suppose Mr. Tizzy did a little sight-seeing
with you after luncheon ?
John Smith: Not until we had spent a long time in the
melting and refining department of the Assay Office. We lunched Twenty-thirdStreet.
68 COIN OF THE EEALM
Separation of
gold andsilver.
Amount of
alloy
allowed.
Treatmentof goldgranulations.
at a very grand restaurant in Twenty-third-street,—that street
which crosses Fifth-avenue at right angles just where Broadway
intersects them both diagonally.
Mr. Bullion : I know ; a very wide street, not far from
Madison-square.
John Smith : That's it, sir. After lunch we went back to the
Assay Office, and then Mr. Tizzy took me into the refining
department and explained the whole process to me, from begin-
ning to end. The gold and silver deposits are both melted down
and granulated for the purpose of separation ; the deposits being
so combined that the gold granulatious shall have over two parts
of silver and copper to one of gold, taking care that there shall
be not more than 8 per cent, of copper in the mixture ; whilst
the silver granulations are all right if there is not more than
1 4 per cent, of copper alloy in them.
Mr. Bullion : Did you see it all done ?
John Smith : No, there would not have been time to see
everything. We went straight to the separating room, and
there Mr. Tizzy told me how the gold and silver granulations
had been prepared. In this room there are four huge cast-iron
kettles set in two furnaces, each kettle being made to hold 168
gallons. Two of them are generally kept for gold, and two for
silver granulations, and the sulphuric acid is added to the granula-
tions from time to time from a reservoir on the floor above, into
which it has been forced by air pressure from a receiving
cylinder into the basement. I will tell you what happens to the
gold granulations first.
Mr. Bullion : I think you must have a good head on your
shoulders to be able to stand so much cramming without getting
mixed, like the metals, in your descriptions
!
John Smith : As I said before, it all comes of my having
actually seen these things with my own eyes, and having had
the different apparatus explained to me. After the gold
granulations have been boiled for four or five hours, a pitcher
or two of stuff called " waste acid " is carefully poured into
each kettle to help settle any floating gold. Mr. Tizzy timed
our visit to the separating room so that we arrived at the end
of the five hours' boiling, and saw the waste acid poured into the
kettles ; then we took a tram whilst the gold was settling, and
went down Broadway to the end of all things, and when there
WHAT IS IT? 69
we visited the emigrants' landing station, and the park and visit to the
rotunda where tne emigrants are able to put up and get their emigrants'
money changed on their way through New York. station.
Mr. Bullion : And did you get back in good time ? for it is
a long way down to the landing-station.
John Smith: We were not back in time for the whole
process, but Mr. Tizzy made it all clear to me. When the
solution had been left cooling for an hour it was siphoned into
the silver-reducing vats on the floor below, and by-and-bye you
shall hear what became of it. The gold left in the kettles had
fresh acid added to it, after which it was transferred to a sixty-
gallon kettle by means of cast-iron scoops made like colanders,
and was boiled again in two successive charges of acid. By
this time nearly all the silver must have been boiled out of the
gold ; so the weak solutions of silver were siphoned off, and the
gold was well washed, first by being decanted into a lead-lined
wooden vat, and then filtered through wooden tubs having false
bottoms with many holes in them, and covered with filtering
paper and sheeting. All this treatment was repeated twice, a fresh
kettle being used each time ; and when the contents of the third
kettle had been washed and filtered, it yielded gold which when
it had been melted, fluxed, and cast into bars was from 997 to Gold bars
9981 per mil fine. A coating of bone ash on the surface of the per mil fin^
melted metal was used to absorb the base metal oxides and the
flux.
Mr. Bullion : They do, indeed, manage to produce very fine
gold ; it is weighed by the carat, I presume, and 997 to 998|
carats of pure gold would mean from 1£ to 3 carats only of
alloy in a thousand.
John Smith : A carat being twelve grains, you know ; the
amount of alloy left in the gold is hardly worth mentioning.
I did not know what the Jlux was until I had asked Mr. Tizzy; Flux,
he explained to me that it is something added to the metal to
make it melt more readily; in this instance the gold was
fluxed with borax and nitrate of soda. They have brought
their refining process to great perfection, have they not, sir ?
Mr. Bullion : They have, indeed
!
John Smith : Let me finish off the silver now. I must take Treatment
up my story at the point where the contents of the four big of Sllve*.
kettles had been boiled for fcur or five hours, some waste acid
70 COIN OF,THE REALM:
added to them, and the solutions allowed to cool for an
hour. The solutions, which contained dissolved silver and
haser metals, were siphoned from the two kettles, which. con-
tained the gold granulations, into the silver reducing vats on
the floor below.
Mr. Bullion : I followed you as far as that.
John Smith : The solutions from the two kettles in which
the silver granulations had been boiled were also siphoned into
these same vats.
Mr. Bullion : "What are the silver-reducing vats like ?
John Smith : There are four of them, two being used on
each alternate day. They are each 14 ft. long, by 6 ft. wide,
but only 2-|- ft. deep, so as to allow of their contents being
easily handled from the outside. From day to day the water
and weak solution, in which the gold has been washed and
filtered, runs into a leaden vat, from which it is siphoned into
one of two tanks which stand on a high platform on the floor
below—that is, in the same room with the silver-reducing vats.
The solution is allowed to stand all night, so as to settle any
gold that might he left in it, and is then run into the silver-
reducing vats.
Mr. Bullion : It seems to me that the silver-reducing vats
are made to hold a ha'porth of all sorts !
John Smith (laughing): That is quite true, sir. Whenthe silver in the big kettles is washed and filtei'ed, the weak
sulphate of copper, which is the result of the filtering, runs
into these same silver-reducing vats. Just think what a mix-
ture it is ! Strong solutions of silver from the silver granula-
tions, weak ditto from the gold granulations, and sulphate of
copper and weak solutions of all sorts of baser metals ! Water
is often added to the mixture to reduce its strength, and finally
the contents of the vats are hoiled for four or five hours by
means of steam. The silver gradually gets deposited on the
copper plates placed at the hottom and on the sides of the vats,
part of the copper having gradually replaced the silver in the
solution. The next morning this copper solution is siphoned
into two large concentrating . tanks, which stand on platforms
on a still lower level than the silver-reducing vats ; and the
silver, after being scraped from the copper plates, is transferred
to filters and washed free from sulphate of copper. When
WHAT IS IT? 71
melted, fluxed, and cast into bars, this silver is found to be from
999 to 999^ per mil fine ; even finer than the gold, you see !
(That same day, when Mr. Bullion and Mr. Yerdigris were
smoking their after-luncheon pipes, the following conversation
took place).
John Smith : I am so sorry to be saying good-bye to you to-
morrow, Mr. Verdigris ; I cannot thank you enough for all your
great kindness ; but, please, come and see me when you visit
England, and you will find a warm welcome ready for you at myfather's house.
Mr. Verdigris : Thank you, John ; I shall probably take you
at your word, for it is quite my present intention to go over to
Europe next year, if all be well.
Mr. Bullion : Then be sure to let us know when you are
coming, for I shall invite you, and John also, to accompany
me in my balloon on a visit to some of our tin and copper
mines.
Mr. Verdigris : I shall be delighted to do so, for I have had
no experience of either tin or copper mining, and I do not con-
sider my education complete as far as coinage is concerned until
I have done so.
John Smith : I can understand your wanting to know all
about copper, sir ; but what has tin to do with it ? Wehaven't any tin-money, though we do speak of our " tin
"
sometimes
!
Mr. Verdigris : Although we have no tin coins, we have
plenty of bronze ones. Our pence, half-pence, and farthings
are made of a compound metal, composed of ninety-five parts of
copper to four of tin and one of zinc.
John Smith : How stupid of me never to have asked of what
bronze was made !
Mr. Verdigris : Then again : both the gold and silver of
which our coins are made are alloyed with copper. The gold
employed in the manufacture of sovereigns and half-sovereigns
contains eleven-twelfths of gold to one-twelfth of copper ; whilst
silver money contains silver and copper, mixed in the propor-
tions of 925 parts of silver to 75 parts of copper. Coins madeof pure gold or silver would be too soft to retain long any
impression stamped upon them, and would soon get worn out
of shape ; but the right quantity of copper alloy when mixed
Silver bars
999 to 999£per mil fine.
Goodbye to
Mr. Verdi-
gris.
Tin used in
coinage.
Bronze for
coinage.
Gold for
coinage.
Silver for
coinage.
72 COIN OF THE EEALM
with either of these metals give it just the necessary hardness
and durability required for the purpose.
The following account of a new process of separating gold from,
its ores by amalgamation appeared in the " Times " last
September ; it is so interesting that I have obtained the kind
permission ofthe editor of the " Times " to republish the article
in full, wordfor word, as it was given :—
Inventor of
hydrogen-amalgamprocess.
Refractoryores causemercury to
sicken
.
The Hydrogen-Amalgam Process.
" The difficulty, or rather the impossibility, of obtaining by
mercurial amalgamation anything like the full yield of gold
from what are known as refractory ores has long been
recognised, and has led to the application of various remedies
from time to time. The difficulty arises from the circumstance
that in some ores the gold is variously associated with sulphur,
iron oxide, arsenic, antimony, or zinc ; and the presence of any
of these ingredients destroys the c quickness ' of the mercury
and so renders it sluggish and incapable of seizing and
retaining the atoms of gold. The most recent invention in
connection with the present subject is the hydrogen-amalgam
process, which has been invented by Mr. B. C. Molloy, M.P.,
the working of which on a practical scale we recently
witnessed at the laboratory of Messrs. Johnson and Sons, of
Cross-street, Finsbury, assayers to the Bank of England. Theprinciple involved is the well-known one that when gold is
brought into absolute and maintained contact with clean or
' quick ' mercury, the gold is absorbed by and retained in the
mercury, from which it is afterwards retorted. In cases where
refractory ores have to be dealt with, they cause the mercury
to ' sicken '—that is, to become coated with an oxide, which lies
like a sheet of paper on the surface of the body of the
mercury, preventing contact between the particles of gold and
the clean portion of the mercury. This sick mercury also
powders away, or, as it is termed, • flours;
' so that the floured
fluid metal is carried away and lost, leaving fresh surfaces to
be attacked by the injurious ingredients in the ore. The result
WHAT IS IT? 73
is, therefore, that not only is the gold not captured, hut mercury-
is lost or carried away in the refuse or tailings. With some Loss <>f gold
of the less refractory ores the loss of mercury is from 2lbs. to
6lbs. per ton of ore treated, while in some other cases the loss
is much greater. Owing to this difficulty in the treatment
of auriferous ores, it has been estimated that an average of
40 per cent, of the gold contained in the ores treated is annually
lost. The object of the hydrogen-amalgam process is to save
this enormous loss of gold and mercury, and, according to
authoritative reports, this object is completely and successfully How to
attained. The method pursued is, first, to maintain the ^^Jj"^6..
' quickness ' of the mercury, no matter how deleterious the of the
character of the ore ; and secondly, to insure a continual mercur7-
contact between each separate particle of the pulverised ore and
the ' quick ' mercury. The apparatus for accomplishing this
consists of a shallow pan about lin. in depth and 41|in. in
diameter, which contains mercury about |in. in depth. Inthe centre
of this pan is a porous jar, so placed and fixed that the mercury
cannot enter or move it. Within this jar is a cylinder of lead
and a solution of sulphate of soda. This lead cylinder, which
constitutes the anode, is connected with the positive pole of a
email dynamo machine, while the mercury is connected with
the negative pole of the same dynamo. When the current
passes, oxygen is evolved from the surface of the lead anode,
while hydrogen is evolved from the surface of the mercury.
This action, which is apparent to the eye, is of course due to
the decomposition of the electrolyte formed by the solution of
sulphate of soda. The mercury combines with a portion of the
hydrogen, and so forms a hydrogen-amalgam, while the excess
of hydrogen so formed passes away. Now, while the mercury
is thus charged with hydrogen, it cannot oxidise, because of the
presence of an excess of hydrogen. Thus, no matter what the
character of the ore, the mercury under these conditions is
always quick, and greedily attacks and absorbs the gold into
itself.
" So far the ingenious but simple method of maintaining jjow t bring
the mercury in a quick condition. We now have to describe the the powdered
equally ingenious and simple means whereby the pulverised gold continual
ore is brought into absolute and maintained contact with the contact with
quick mercury. Floating upon the surface of the mercury is a
74 COIN OF THE REALM:
Machines at
work in
different
countries.
[creasedquantity of
goldextracted.
disc 40in. in diameter, which, dimension leaves a narrow
outside channel all round the edge of the pan where the mercury
is uncovered. The centre of the disc has a circular hole in it, so
as to clear the porous jar by about 2in. This central opening in
the disc has a rim about 2in. high which forms a hopper. Thedisc as it floats on the mercury is slowly revolved by simple
mechanism. The pulverised ore as it leaves the stamps or other
crusher, flows into the hopper accompanied by a stream of
water, and is then by centrifugal action carried under the
revolving disc and rolled round in the mercury in ever-increasing
circles, until it reaches the periphery of the disc, and consequently
the outward channel between the edge of the disc and that of
the pan. Here, freed from the pressure of the disc, the
pulverised ore floats up and over the edge of the pan, and
passes away, leaving behind it in the mercury every atom of
gold it previously contained. This perfect extraction is due to
the rolling action, which separates each particle of the ore and
rolls it for some ten seconds in the bright, quick mercury,
which wrests every atom of gold from it. The whole machine
weighs only about 5 cwt., and its working capacity is 10 tons
per day. It will be seen that the conditions which here obtain
are the most perfect for the purpose of amalgamation. Owingto the perfection of contact no floating gold can escape, and in
the presence of hydrogen no sickening of the mercury can take
place. Hence, every particle of the gold is secured, unless
mechanically encased in an atom of ore. The process has long
since passed the experimental stage, but the Hydrogen-AmalgamCompany, who are working the patents, were careful not to
publish any particulars of the invention until it had assumed
a practical form, and could be deemed a commercial as well as
a scientific success. Machines are at work in the United States
of America (where they have been tested and favourably
reported on by Professor P. de Pierre Ricketts), the Transvaal,
and Mexico, while some are now on their way to India,
Australia, and New Zealand. It is stated that the increased
quantity of gold extracted by this process has never been less
than 10 per cent., and that in most cases a much larger per-
centage is reached. In short, this method of applying
electricity, with the intervention of a porous wall or cell, has
overcome all the difficulties previously encountered, while the
WHAT IS IT? r:>
whole cost of treatment by this process is said to amount to only Small cost of
about threepence per ton for both electrical and mechanicalbrea
tJ^
n
force, and for labour." From the Times, September 9th, 1887. process.
Chapter VIII.
A visit to the
Mint.Mb. Bullion and John Smith have just returned to England.
They are pm^suing their way steadily through certain streeta
in the great city of London, on foot, and with a decided air of
business.
Mr, Bullion : Well, John, your education is nearly complete
so far as the history of metal money is concerned. At this
moment we are on our way to the place where I propose that
you shall take some finishing lessons.
John Smith : Which means that we are going to pay a visit
to the Mint, does it not, sir ? The Tower of London is close
at hand, and I know that the Royal Mint is not far from it.
Mr. Bullion : You have made a good guess. Mr. Consol Mr. Consol
has promised to be there, and to shew us over the premises.
There he is, standing at the entrance-gates looking for us.
Mr. Consol : Good morning, Bullion;you are pretty true to
time. So this is the young man who wants to be let into all
our secrets, is it? Well, sir (giving him his hand), you
shall see all that is to be seen, only you must not try to
pocket any of our money ! Come this way. (He led them
into the reception room, where they entered their names in the
visitors' book.)
Mr. Consol : We are going to take things in their right order,
so our first visit will be to the melting department. These
blocks looking like bricks are called ingots. Just take this one
into your hand. (John's hand involuntarily dropped with the
weight of the ingot.) Ah ! I thought you would be taken
by surprise ! Each of those ingots weighs 200 ounces, and is
worth £800. Every ingot has to be tested by the assayer,
and according to his report the melter adds either gold or
alloy to bring the metal to its standard fineness,—twenty-two
The meltingdepartment.
Weight of
gold ingots.
76 COIN OF THE REALM:
Gold bars.
Silver bars.
Gold bars
rolled andannealed.
Fillets
brought to
right thick-
ness andweighed.
parts of fine gold to two parts of alloy. In this crucible the
metal is melted, and then cast into bars like these you see,
about 10 lbs. each in weight, and measuring twenty-one inches
long, one and a half inches broad, and three-eighths of an inch
thick.
John Smith ; And is this what our silver coins are made of ?
(pointing to some rather dull-looking bars of metal.)
Mr. Consol : Yes ; they do not look a very promising colour
yet, do they ? that dulness is the result of oxidation, or the
coating of the alloy with oxide ; but it is easily removed with
acid, as you will see by-and-bye. The processes of manufacturing
gold, silver, and bronze coins are so nearly the same, that if wefollow up the history of these gold bars, you will know quite
enough about coining.
John Smith : Is it quite certain that those bars have the
right quantity of fine gold in them ?
Mr. Consol: The assayer has to test every set of bars before
they are allowed to be sent on to the coining department. Butcome with me and see what becomes of our gold bars.
They followed Mr. Consol into another large room.
Mr. Consol : These pairs of rolls are worked by steam. Just
notice what an uncomfortable squeeze they can give ! Each
bar undergoes six or more pinches, which reduce it in thickness
whilst its breadth is increased. After the pinches, the bars
are enclosed in copper tubes, and put into the annealing
furnace, where they are subjected to a dull red heat for
twenty minutes.
Mr. Bullion ; John looks as if he wanted to ask a question.
John Smith : I know that to anneal metal is to soften it bymaking it red-hot ; but I should like to know why that is done
to these metal bars.
Mr. Consol : Those pinches between the heavy rolls makethe bars too hard to receive a good impression from the dies
with which the coins are stamped ; so the metal is annealed in
the manner I have just described. Here are some bars that
have come from the annealing furnace, and must now go
through the pinching process again until they are reduced to
a thickness corresponding to that of the coins to be made. Whenthe fillets (as these strips of metal are called) have been rolled
and gauged until thought to be the right thickness, they are
WHAT IS IT ? 77
passed on to the tryer. Just observe what he is doing : he is
cutting blanks from each fillet and weighing them.
John Smith ; Is the weight of each blank obliged to be quite
exact ?
Mr. Consol ; Should it vary so much as fths of a grain, it Cutting room,
is rejected, and sent back to the melting-room. We will nowpass on to the cutting-room.
Mr. Bullion : I hope you are taking it all in, John ?
John Smith : Yes ; I am making notes in my pocket-book of
the weights Mr. Consol gives me, so that I may not forget them
by-and-bye.
Mr. Consol : Here we come to another stage in the pro- Making
ceedings. The fillets of metal are passed under these machines, blan s '
and the blanks which are to become coins are punched out
of them.
John Smith : What a lot of scraps of metal are left ! I
suppose they are not wasted ?
Mr. Consol ; No ; the value is in the fine grains of gold Marking
those scraps contain, so the scissel (as it is called) goes back to machines.
the melter. And now these blanks are further prepared for
receiving their impression in a marking machine, which presses
the edge of each piece inward.
John Smith : How fast they are done ! The pieces flow from
the machine like a stream of water.
Mr. Consol : The blanks have become hard again by all the Blanks
rolling and punching the metal has undergone, so now they are washed.
once more sent to be annealed, otherwise they would not receive
a clear impression. After this the gold blanks are put into hot
dilute of sulphuric acid for a few minutes, to remove any oxide
of copper from their surfaces. Then they are carefully washed
and dried and are ready to be stamped. The beautiful bloom
on the face of a new sovereign is due to this removal of the
superficial copper.
John Smith : And what has been done to these silver Treatment of
blanks ? They do look beautifully new, just like frosted silver. silver blanks.
Mr. Consol ; You saw how dark and dull the silver looks
at first ? Well these blanks have been dipped in the acid and
then dried in hot sawdust.
John Smith : I could not have believed it would have madesuch a difference to the look of them.
78 (JOIN OF THE REALM
:
Press room. Mr. Consol : This room which, we have now entered is the
press-room. In the lower part of the presses are dies, with mov-
able steel collars surrounding them. Each blank drops into
Stamping the one °f tne stee^ collars >round the inside of which the milling
coins. (s cut, and this is transferred to the edge of the coin at the
same time that the two impressions are stamped upon its back
and face from the two dies.
Mr. Bullion ; Look at the little ridges round the edge of a
gold or silver coin, John, and you will know what Mr. Consol
means by the milling.
John Smith : I see. Each blank is laid upon a die in the
press, and the other die, which is fixed in the upper part of
the machine, comes clown upon it. That's very clever,—to stamp
both sides of the coin and its edge with one heavy blow.
Mr. Consol : The machinery is very perfeet, is it not ? These
boys have only to fill the tubes with blanks and the
machinery connected with the press places each coin in the
steel collar, stamps it, and removes it from the press. About
ninety coins can be stamped per minute in each press, and as
there are fourteen presses which can be kept going at one
time, we make money here rather faster than most people can
earn it, do we not?
John Smith : I should just think you do ! Is there ever
anything wrong about the coins made in these presses, sir 1
Weighing Mr. Consol : Occasionally, but not often. Now, come alongthe coins.
an(j gee ^Q C(nns weighed. Twenty-three coins per minute is the
rate at which the operation can be performed, and their exact
weight is ascertained to within one hundredth part of a grain.
John Smith: A sovereign contains about 113 grains on
issuing from the Mint, doesn't it, sir ?
Mr. Consol : Yes ; but you must remember that though the
value of each soverrign depends on the weight of fine gold in it,
there is also a certain amount of alloy in each coin, so that its
full weight is, as nearly as possible 123^ or 123-274 grains. It
is not possible to be quite exact, so there is a limit, or remedy
as it is called. No sovereign is allowed to be issued weighing
more than 123-474 grains or less than 123-074 grains. The
coins which come within this remedy are passed on to be issued,
whilst the heavier and the lighter ones are sent back to the
melting room.
WHAT IS IT P 79
John Smith : Altogether a good deal of the day's work seems
to find its way back to the melting room.
Mr. Consol : Yes ; but it would not do to be careless about Inventor <>f
our currant coin. These little weighing machines were invented ^chim^by a Mr. Cotton, formerly a director of the Bank of England,
and are most wonderfully and perfectly constructed. You see,
we have no less than 30 of them standing upon the tables in this
room. The pieces of money are fed into a hopper at the top of
each machine, a quantity at a time, so that one man can attend
to several machines at once. The machinery pushes out the
pieces, one at a time, from the bottom of the heap in the hopper
;
they rest for a moment on one pan of a pair of scales, and then
fall over.
John Smith : Look, Mr. Bullion ! Isn't it curious to see
them coming ; they are falling into different compartments !
Mr. Consol : That is the cleverest part of the dodge. That
large heap of the coins which are falling off in the centre, con-
sists of sovereigns of true weight, or within the remedy ; those
which drop to the right are over weight, whilst those to the left
are under weight, and must all go back to the melting room.
John Smith : It is one of the most splendid machines I ever
saw ! But what a lot of weighing and fuss each coin goes
through.
Mr. Consol : Even now these coins of true weight are not Imperfections
quite safe from the melting room. Come and take a look atpic
another kind of machine. Several coins at a time are being
shown off upon a cloth belt—first one side of them, and then the
other. If any imperfection is detected upon either face of a coin,
it is picked out, and back it goes to be melted down with the
other rejected coins.
John Smith : It is lucky that so many of the coins come out
all right, otherwise a lot of time and trouble would be wasted
every day. But what becomes of the coins which are all right ?
Mr. Consol : They are tied up in bags containing so many Terfect coins.
pounds' weight each. Then some of the contents of each bag
are taken out, just as they come, and weighed and tested by
certain officers of the Mint ; and finally one piece of money from
each bag is sealed up in a packet and put away in the Pyx prif^
of the
chest, there to remain until the next " trial of the Pyx " comes
on. Do you know anything about this " trial of the Pyx "?
80 COIN OF THE REALM :
British
moneycoined at
Melbourneand Sydney.
John Smith : I think I remember that the money in the Pyxchest is examined every now and then by a jury of the Gold-
smiths' Company, to see that it is of the right standard and of
true weight.
Mr. Consol : Tes ; this takes place every year at the Gold-
smiths' Hall. And now I think I have come to the end of all I
have to show you.
John Smith e I am greatly obliged to you, sir, for all the
trouble you have taken.
Mr. Bullion: Thank you very much, Consol. "We have
taken up a great deal of your time ; but I am sure John has
appreciated your kindness, and will make a good use of what
he has seen.
(N.B. I have thought it best to assume that gold as well as
silver and copper coins were being coined at our British Mint.
Sovereigns and half-sovereigns are also coined at Melbourne and
Sydney. "When this is the case, a very minute "M" or " S n
will be found engraved under the impression of our Queen's
head, just at the edge of the neck, or under the shield on the
reverse side. The coins issued from our Mint are not thus
lettered.—E. C. S.)
WHAT IS IT ? 81
SECOND SEELES.
Chapter I.
Yott must now imagine that three months have elapsed since John Smith's
the last chapter of the first series was written. Duiing that Yisit to.
time John Smith has been working steadily at school ; but he
has not been forgotten by his friend, Mr. Bullion. To his great
delight he has been invited to spend part of his Christmas holi-
days at a charming country house about three miles from
Manchester, with Mr. and Mrs. Bullion, their daughter Alice Mr. Bullion's
aged seventeen, and their son William, aged fourteen years. I family-
shall begin this chapter with an account of a conversation that
took place between Mr. Bullion and John Smith on the evening
of his arrival at Ingotsville.
Mr. Bullion : Whilst you are staying with us, John, shall
you be inclined to pursue your coinage studies with me ?
John Smith : I should like it awfully, sir. I have forgotten
nothing yet, and you promised to show me, some day, how to
make use of what you taught me.
Mr. Bullion : I believe I did make that promise, and I shall
be quite ready to fulfil it as soon as I have explained to you a
few more terms which are used expressly in speaking of money,
Let me see;you already know something about the systems of
exchange which were in use before metal money became the
recognised medium of exchange in nearly all civilised countries
;
also, why metal is superior to all other substances for this
purpose ?
John Smith : Yes ; and besides that I know how the metals
are taken out of the earth and converted into money.
Mr. Bullion : Then comes the question,—What use can you
make of this knowledge ?
John Smith : And that's what I cannot answer, for I do not
yet know what is to come of all your teaching.
6
82 COIN OF THE EEALM
:
Proposed Mr. Bullion : To-morrow, then, you shall begin a new andpractical practical course of study, which I think you will enjoy sharing
value and use with Alice and Will, who are just now much interested in theof money. same subject. I shall send you young people to do all our
shopping for us, and you will have to give me an account of
what you have spent each time by the help of the new system
I am going to teach you.
John Smith : It sounds as if this new study was going to be
a jolly one ; but I have always been told that money was a very
dry subject to take up.
Mr. Bullion : Probably you would find it dry if you had to
sit down and read some of the books which have been written
about it ; but I don't think the subject need be an uninteresting
one by any means if mastered in a practical manner. I believe
you are fond of arithmetic, and so are my children ; therefore
you will not mind having to do some decimal multiplication and
division, I hope ?
John Smith : Not a bit ; I like anything in that line. But
have you time to-night, sir, to teach me the meanings of the
new terms you were speaking of just now 1 If you have, I shall
be ready to start fair with the others to-morrow.
Mr. Bullion : I shall be only too glad to have a talk with
you now. You understand the difference between standard and
token money, do you not 1 (Readers are recommended to refresh
their memories on these points by turning back to Chapter II.
First series.)
John Smith : Quite well, I believe.
Unit of value. Mr. Bullion: Very well ; then you are prepared to face the
new facts I am going to give you. Three terms are employed
in speaking of a nation's currency, which, although they need
not mean the same thing, are closely related to one another.
They are (1) coin; (2) unit of value
; (3) money of account. Theword coin needs no explanation, as you understand it already.
The unit of value is a certain weight of standard metal, but it is
not always made up into a standard coin. Sometimes it is too
large or too small a quantity to be made into a convenient-sized
coin ; and when this is the case it is only necessary that current
coins should be multiples or sub-multiples of the unit of value.
John Smith : I am afraid I don't quite take in all that yet,
sir.
WHAT IS IT ? 83
Mr. Bullion : Suppose there were no gold coins in England,
but that silver was our standard metal. I do not think weshould care to have one-pound pieces coined in silver—they
would be so large and heavy; and yet our standard unit of
value might be one pound all the same, and we might
reckon half-a-crown to be an eighth part of it, a florin a
tenth part, a shilling a twentieth part—and so on.
John Smith : I quite understand now, thank you.
Mr. Bullion : Then, as to the moneys of account, or numbers Money of
, account,by which we express value, they need not be composed of either
standard or current coin. Imagine a silver crown, or five-shilling
piece, to be the money of account in England. Eor convenience
sake it might never be coined, and yet we might express the
value of things by saying that they were worth so many crowns
or fractions of a crown. Our money of account would be a
fourth part of the standard unit of value, supposing the latter
to be one pound.
John Smith ; A sovereign really is our standard unit of British
value, I know ; but what is our money of account, please, sir ?
Mr. Bullion : In England it most conveniently happens that
the principal coin, a gold sovereign, is both the unit of value
and also the money of account for all large sums. Small
sums are still spoken of as so many shillings, although a
shilling is now only a token, instead of being, as in former
time, the English money of account.*******At breakfast time the next morning, John Smith heard, to Shopping in
his great delight, that Will Bullion was going to drive him andManchester -
Alice into Manchester, where they were to put up the pony and
carriage for some hours, make various purchases, and lunch
together at a coffee house. Mr. Bullion invited the young people
to come to him in his study at eleven o'clock, so that he mightgive them their first lesson in " Norman's Single Grain System " Norman's
before they started on their shopping expedition. As soon, then, sy^tem^*""as they were seated at his study table, with paper and pen before
each of them, Mr. Bullion began, as follows :
—
Mr. Bullion : The first thing we have to do is to find the Denomina-
denominational expression in British money of a single grain oft^ona
„1 exPres-
gold. How many of these grains does a sovereign contain on grain of gold
its first issue from the Mint ? *» a/o1/standardcountry.
84 COIN OF THE REALM:
Will: 113-0016 grains, father.
Mr. Bullion : Then how are you going to set about discover-
ing the demominational expression of a grain of gold ?
They all shook their heads as Mr. Bullion looked from one
to the other.
Alice : You must tell us, father, for we cannot be expected
to guess this sort of thing, you know.
Mr. Bullion : There are 240 pence in a sovereign, are there
not ? Then if you will divide those 240 pence by the weight,
namely, by 113-0016 grains of gold, which a British sovereign
contains, you will get at the denominational expression in pence
of a single grain of gold.
John Smith : What a duffer I must have been not to have
thought of that when you asked how it was to be done, sir !
(And before the others had finished their calculations he added)
:
A grain of gold is worth 2-123863 pence, that is, as nearly as
possible 2|u.
Mr. Bullion : That is quite right. Well, now, I want you to
make yourselves at home with this "single grain system" by
keeping a faithful account of all that you spend when you go
shopping for us, and by stating the price of each purchase that
you make in grains and decimal parts of grains.
Will: That will require a good deal of consideration and
totting up at first, father.
Alice : But what fun it will be ! Don't you think so, John ?
John Smith : I should rather think I did ! It will be a
great joke, and we must see which of us can be quickest at
reckoning the number of grains each thing costs.
Mr. Bullion: As this way of reckoning money will require
some practice, you had better work out for yourselves tlie weight
in grains offine gold of every British standard and token coin;
you will have time to do this before you start.
Will : But, father, surely we must find out the number of
grains of silver in each silver coin, and of copper in each copper
coin?
Mr. Bullion: Not so, Will. Our silver and copper, or,
rather, bronze, coins are only tokens ; their value does not
depend on the quantity of silver or copper they contain, but on
their being legal tender for some fractional part of our standard
coin, the gold sovereign. A shilling, for instance, represents
WHAT IS IT ? 85
the twentieth, part of a sovereign, therefore its exchange value is
the twentieth part of 113-0016 grains of gold. Here is a new
pocket-book for each one of you in which all future reckonings
are to he made.
Alice : You are a dear, delightful old father to have thought
of everything like this.
Mr. Bullion : Remember, I am not to be expected to examine
th9 contents of your pocket-books ; but to-morrow morning I
shall hope to find three fairly written-out accounts of to-day's
shopping laid upon my table.
John Smith : Are we to give the price of each thing we buy
in grains of gold only, sir ?
Mr. Bullion : I think you must give both the price in moneyof each article, and also the number of grains of gold it is worth.
Each of you shall have some commissions to do;your mother
will provide you with your list of errands, Alice, whilst I makeout a couple of papers for John and Will.
Before starting for their drive, the three young people madethe following calculations, and entered them in their respective
pocket-books :
—
Denominational Expressions of British Coins, with their
Real and Representative Weights in Fine Gold.
Standards.
±1 contai]as 113-uuib, or about JLI3 graius. Denomina-
10s
\>KENS.
>)56-5008,
)> 56£ „ tional
expressions
of all the
5s. 0d. is worth 28J hBritish coins
2s. 6d. >>14-1252,
5>
with their
real and2s. Od. j> 11-30016,
3 J ll^r „ representa-
Is. Od. >} 5-65008,)}
K13°27 »
tive weightsin fine gold.
6d.j> 2-82504,
)> n «3d. >> 1-41252,
)> H „
2d. >> •94168, or nearly 9TO" »
Id.'j •4708,
>> £ ii
H >5•2354,
>» k »
Id. >) '1177, or rather more than ^ of a grain.
Mr. Bullion
:
One thing more I wish you to bear in mind in
86 COIN OF THE KEALM
:
Conditions of
standard
metal money.
GreatPyramid of
Egypt.
Professor
Piazzi Smythand MajorTracey, R.A.
Queen'sChamberstandard of
measure.
connection with standard metal money. It is this : If a metal
is to become the monetary standard of a country, it must be
received in unlimited quantities at the mint (or institution which
answers to it), fitted for currency, and appointed unlimited legal
tender.
John Smith : But I thought that was always the case ?
Mr. Bullion : In some countries, both gold and silver are
appointed unlimited legal tender, but they are not now both
received in unlimited quantities at any mint. Those countries
cannot properly be said to possess a dual standard or bi-metallic
currency, for their international trade (that is, their trade with
foreign countries) is conducted on the dearer metal only, there-
fore the dearer metal is their standard metal.
John Smith : I long for to-morrow, that we may begin our
shopping
!
Mr. Bullion : I told you that all your calculations will have
to be made by means of a new system, but I must also tell you
that this system is not my own.
John Smith : Then whose can it be ?
Mr. Bullion : I shall answer your question with another
Did you ever hear of the Great Pyramid of Egypt 1
John Smith : "Well, yes, I believe I have ; but I can't say
that I know anything about it.
Mr. Bullion : Then I must tell you a few particulars about
this Great Pyramid before I can answer your question. It is a
wonderful piece of masonry; the oldest and most wonderful
that has ever been discovered. It has a square base, each side
of which measures over 760 feet. The four sides, sloping
inwards and upwards, meet at a point 486 feet above the base
of the pyramid. Several years ago, Professor Piazzi Smyth (the
Astronomer Royal for Scotland) tMajor Tracey, R.A., and other
learned men found out some very interesting facts connected
with this wonderful building and the plan of its erection. One
of their discoveries was as follows : Inside the pyramid, there
are two small chambers, approached by long passages ; and
certain measurements contained in one of these little rooms
—
the one named the " Queen's Chamber "—are the key to the
standard of measure, according to which every part of the
pyramid was planned and built. Many of these discovered
measurements are found to agree with scientific facts which were
WHAT IS IT? 81
unknown to us until three or four thousand years after the
building of the pyramid, such as the number of days in a solar
year, and the distance of the sun from the earth.
John Smith : I certainly never heard about these things
before, but I cannot think what the Great Pyramid of Egypt
can have to do with the new system that you are going to teach us.
Mr. Bullion (laughing) : I thought I should puzzle you by
wandering so far from our subject ; but now I will tell you in
what respects these two seemingly different branches of study
agree. Just as scientific men were led through the passages of
the Great Pyramid until they reached the Queen's Chamber,
wherein they found a standard of measure revealed to them by
the hand of the architect who planned the building ; so have
you and I wandered together through one passage in the his-
tory of money to another, until at length, in this jubilee year of
our gracious Queen's reign, a new standard of monetary measure Norman's
has been revealed to us by the hand of a friend of mine, Mr. J. standard of
H. Norman. This standard of measure is a unit of weight, a measure.
grain of precious metal, and it is the key to the true value of
every standard coin in the world.
John Smith : How very interesting ! And will the grain of
metal have anything to do with our shopping expeditions, sir ?
Mr. Bullion : It will have everything to do with them, myboy, for I am going to try to make you, and Alice, and Will work
out for yourselves by practical experience "Norman's Single
Grain System,"
Chapter II.
The three young people started in high spirits. They drove yisit t0 Man .
into Manchester at a brisk pace, and after putting up the Chester,
pony, proceeded to consult their different lists of commissions.
John Smith: Ladies first! so, Miss Bullion, you mustdecide where our shopping is to begin.
Alice: Mother wants a whole lot of things at the iron-
monger's, which I may as well get here (pointing to a shop close
88 COIN OF THE REALM
:
Alice Bullionat the iron-
monger's.
The Tailor.
by) j but you needn't come with me, for I daresay I shall be
some time choosing all the things.
Will : We wouldn't miss seeing you do it on any account,
Allie. Besides, I am sure you won't know how many grains of
gold to give for each article without our help.
Alice : Don't be so foolish, "Will ; we are not going to reckon
by grains until we get home. (So saying, she walked into the
shop and addressed herself to the first shopman she encountered).
I want to look at some moderate-sized saucepans.
Shopman : Enamel-lined, miss ?
Alice (trying to talk as much like her mother as possible).
No ; tin-lined will suit my purpose. (Having selected three she
asked the prices of them.)
Shopman : This one is Is. 8d., and the two smaller sizes
Is. 3d. and Is. 2d.
Will (taking up the largest saucepan) : How many grains
of gold did he say this was worth ?
Shopman: That size is Is. 8d.
Will : Yes, I know. And how many grains of gold is that,
Allie?
Alice (trying in vain not to smile) .- Hush, Will ! (and she
turned her back upon him). I will take these three saucepans,
and I want a steamer that will fit the largest of them.
John Smith (in a low voice) : That biggest saucepan is worth
about 91 grains.
This time Alice could not help laughing, but she resolutely
turned a deaf ear upon the two boys, and went steadily through
her list of wants, interrupted first on one side of her and then
on the other by such remarks as, " The water-can comes to
12-71268 grains ;" " The pepper-pot at 1-8833 grains ; " " Oh !
I say ; I haven't time to reckon if you go so fast!
"
At length the bill was paid, and the goods ordered to be
sent round to be put into the pony carriage. As soon as they
had left the shop, Alice turned with a merry laugh to the two
boys. "You really are behaving shamefully, you two!" she
said. " I cannot have you going on like that in the shops."
" We are only doing as we were bid," Will answered, and I
shall tell father when we get home that you were a naughty,
disobedient girl, who wouldn't reckon by grains as he expressly
told you to do. But here is the tailor's ; I have to pay a bill for
father."
WHAT IS IT ? 89
" Then I shall go on to the grocer's," said Alice, " and get The Grocer,
over a little ofmy shopping in peace." When the boys rejoined
Alice, they were laughing at some fresh joke. " I asked Mr.
Hodder how many grains of gold my new coat and waistcoat
were worth," said Will, " and he evidently thought I had taken
leave of my senses."
" You will really get us into trouble if you go on like this,"
remonstrated Alice ;" do promise not to humbug in the shops,
Will." "I shall make no rash promises, he replied. " But, I
say, Allie : it is high time we went to the coffee-house and had
some food ; I am getting perfectly ravenous."
The boys behaved tolerably well over their luncheon, for Coffee-house
John, being the visitor, was too polite to carry on a joke when unc eon '
he saw that Alice was really worried by it, and he managed to
keep Will a little in check. Once a waiter looked astonished
at Will gravely remarking, as the former set down a dish of
cheese-cakes before them, " These cheese-cakes are worth as
nearly as possible a grain of gold apiece !
"
At length the day's shopping came to an end, and the young Home again,
folks drove home, highly delighted with the outing they had
had. Mr. Bullion was on the look-out for them. " Well,
young people," he cried, as they drove up to the door :" and
what sort of a day have you had 1"
11 Awfully jolly, sir !" John answered.
" Only Allie turned prudish, and wanted to spoil our sport,"
WiU added.
" Oh, no ! Will," John exclaimed ; whilst Alice retorted
quite good-temperedly, " and a good thing that I did turn
prudish, Master Will, when you began to question the shop-
men as to the number of grains a thing was worth !"
" That was carrying your fun too far, my boy," Mr. Bullion
said ;" you never know when to stop. I only hope you were
not rude to anyone ?"
" Oh, no, father," Alice rejoined, quickly ;" Will soon shut
up. We have had a delightful day, and after tea we are going
to sit in the schoolroom and write our papers for you." Sosaying, she ran into the house.
The next morning Mr. Bullion was duly informed that hewould find three papers waiting for him in the study, and hepromised to look them through, and be ready to talk them over
90 COIN OF THE KEALM
:
by eleven o'clock. Alice and John were both in their places
before the clock had finished striking the hour, and Will
rushed in a few minutes afterwards ; they were all anxious to
hear the result of their calculations.
Mr. Bullion : I am very much pleased with your papers
;
they are very well done on the whole. Alice and John have
made every item out correctly, whilst "Will has only given one
wrong figure.
Will : What, I ? I thought mine was sure to be right ; I
did it so carefully.
Mr. Bullion : You shall each read your papers aloud ; and
when your turn comes, Will, I daresay the mistake will soon
be explained. Alice, you are the eldest, so you shall open the
proceedings.
Alice (with heightened colour) : I declare you make mequite nervous, father ! I am " not accustomed to public
speaking," gentlemen, so you must excuse all mistakes. Well,
I will first read you my list of ironmongery ; I think it is a
wonder I got that right, though, for the boys were bothering
me every minute in that shop.
Will : I am sure we helped you ever so much. You would
probably never have found out the value of your water-can, or
your biggest saucepan either, if we hadn't reckoned it for you
on the spot.
Mr. Bullion (rapping the table) : Now, then, to business.
Come, Alice !
List of iron- Alice (reading her paper) : This is what I bought at Tapps :
—
mongery.
One water-can
One saucepan
One ditto...
One ditto...
One steamer
One frying-pan .
.
One zinc washupOne pepper-box .
.
One bucketOne stewpanOne pastry-board
One dozen patty-pans ...
Total...
Price. Grains of
s. d. Fine Gold
2 3 or 12-7126
1 8 >>9-4168
1 3 5)7-0626
1 2II
6-5917
1 5 J)8-0042
1 4 >>7-5334
1 6 >>8-4751
4 JJ1-8833
1 2 JJ6-5917
3 3 u 18-3627
3 6 JJ19-7752
1
JJ
5-6500
19 10 1120593
WHAT IS IT? 91
grocery.
Price. Grains of
.£ s. d. Fine Gold.
10 or 56-5008
7 6 „ 42-3756
1 9 9-8876
1 3 7-0626
;i 6 „ 115-8266
Mr. Bullion : That was a goodly list to work out, Alice ;but
it is all perfectly correct.
Mice: My grocer's bill is not nearly so long—only four List of
items—and yet it conies to more altogether.
6lbs. coffee, at Is. 8d. per lb.
3lbs. tea, at 2s. 6d. per lb. ..,
6lbs. lump sugar, at 3|d. per lb. ...
6lbs. Demerara sugar, at 2|d. per lb.
Total
Mr. Bullion : You have worked out your accounts very well
indeed, Alice, and I have only one improvement to suggest. In
stating the price of each separate article, in grains of fine gold,
you are quite right to give the number of grains and fractions
of grains in decimals to four or five places ; but, after you have
added the items together, you will be more correct if you give
the total result in decimals of two or three places only. By-and-
bye you can prove this for yourself by dividing 238 pence (the
number of pence your ironmonger's bill comes to) by 2-123863
pence—that is, the denominational expression of one grain;you
will then discover that the fourth decimal figure should be nine
instead of three. John already realises this, I see ; for his totals
are given in decimals to three places only. Now, John, let us hear
what you have made of your day's shopping.
John Smith : I first went to Robinson's, to pay for your new Barometer,
hall barometer, sir. That came to <£3, or 339004 grains of fine
gold. Then followed our lunch at the coffee-house. We had as
much beef from a hot joint as we wanted, with potatoes and Bill at
bread, for sixpence each. Miss Bullion's glass of milk came to coffee-house,
twopence ; whilst Will and I each polished off a couple of bottles
of ginger beer, at twopence a bottle. Our cheese-cakes—eight
of them—were not at all equally shared, for Miss Bullion only
ate one, whilst I managed three of them very comfortably, and
Will had four.
Mr. Bullion : Well done, Will ! If you are the youngest of
the party, you do your best to make up for it.
Will (laughing) : I could have eaten four more of those
cheesecakes—only I didn't.
Price. Grains of
s. d. Fine Gold.
... 1 6 or 8-4751
... 2 j>•9416
... 6 )>2-8250
... 8 » 3-7667
... 2 >5•9416
2d. 8}1
3-7667
92 COIN OF THE REALM:
Mr. Bullion : Lucky for you to-day that you didn't I should
say ! Let us hear the items, and the total amount of your lunch
bill, John.
John Smith (reading from his paper) :
—
Three of beef, &c, at 6d
—
One cheese-cake ...
Three ditto
Four ditto ...
One glass of milk...
Four bottles of ginger-beer, at 2d
Total 3 8 „ 20-716
Pony's feed, I also paid one shilling for the pony's feed of corn— that was&c - 5-650 grains of fine gold ; and the ostler's tip came to sixpence,
or 2-825 fine grains.
Will : And now my turn has come. I am longing to know
what is wrong.
Mr. Bullion : Let me see. Your mistake occurs in the
second item of your tailor's bill, where you have stated the price
in grains of fine gold of my seventeen-shilling vest to be 96*0513
grains. How did you arrive at that ?
Will: I looked at my table, and there I saw that 10s. is
worth 56-5008 grains; 5s. is worth 28-2504 grains; and 2s. is
worth 11-3001 grains. These three amounts added together
come to 96-0513 grains. Where's the mistake, father?
Will's Mr. Bullion : So that is the way you obtained your results,
manner ofis it ? Well n j will tell how j skoui<i set about finding
reckoning ' »
corrected. the value of seventeen shillings. First, I should reduce myseventeen shillings to pence, and then I should divide my pence
by 2- 123863d.—that is, by the denominational expression of one
grain of fine gold. This would produce 96-0542 grains—a more
correct result than yours You were quite right, however, not
to carry your calculations beyond three places in decimals, for
your items were all large ones ; and when that is the case the
fewer decimal fractions you employ the more correct you will
be, unless you choose to add greatly to your labour by workiug
out the denominational expression of one grain of gold to at
least nine or ten places in decimals; 2123863d. you must
remember, is only an approximate value of one grain of gold.
WHAT IS IT ?V°
Will : Your way is certainly less roundabout than mine, and
I quite see my mistake now.
Mr. Bullion : Then give us all your particulars, please, for
you have only made that one mistake.
Will : Mr. Hodder's hill is the biggest of the lot, but I think
Allie's account with Tapp was more troublesome to work out.
This is what I paid :
Price. Grains of Tailor's bill.
£ s. d. Fine Gold.
4 4 or 474-606One frock coat (father's " Sunday go-
to-meeting " one) ...
One vest (yours, father) ... ... 17 „ 96-054
One overcoat (mine) 2 5 „ 254-253
One pair of trousers (mine) ... ... 18 „ 101*701
One coat & vest (the ones I have on now) 1 „ 113-001
Total £9 4 „ 1039-615
Mr. Bullion : Yes;your bill came to a good deal altogether. Hat and
Will : Then there was my new bowler—tbat was 6s. 6d., or coal bills -
36*725 grains ; and Mr, Clarke's coal bill came to two guineas,
or 237-303 grains. But father, I don't yet see the good of our
reckoning in grains of gold, like this.
Mr. Bullion: I will try to make that clear to you, Will. Use of single
Were I sure you would never be called upon to handle or think £'ram system.
about any metal money except that which is circulated in Great
Britain, I should still wish you to master this " Single grain
system," because by it you will acquire a knowledge of the true
value of every coin of the realm. I have already told you that
the value of our silver and bronze token coins is much less than
it passes for, and depends entirely on the number of grains of
standard metal they represent ; but there are very few people
who recognise this important fact. I trust that from henceforth
you three young people will never lose sight of this truth—namely,
that silver and bronze coins are only tokens of gold in this land.
I want you also, from this day forth, to think of price as a
definite weight of fine metal, that metal which is the standard
in the country where the price is quoted. You cannot get the
article priced unless you can command this metal, or one of
its tokens which has equivalent value with the metal. There
is another great reason, however, for my wishing you to get
into the habit of thinking that every coin you handle contains
94 COIN OF THE REALM
:
Value in
Englishmoney of
moneys of
account in
foreign
countries.
Value andprice.
Will'sdefinition.
Alice's
definition.
a certain number of grains of gold, or represents so many grains
or fractions of a grain of fine gold. We are not going to stop
at British, coins ; I want you all to be able to tell me by the
end of this week the value in England of the moneys of account
of every other country I may choose to name ; and also the
value in foreign countries of our own standard money of
account.
(There was a general outcry at this proposal.)
Alice : My dear father ! You are giving us a dreadfully short
time in which to get all that into our heads. Why, I don't sup-
pose that either one of us knows the value of ten foreign coins
yet!
Mr. Bullion : I did not say that I should expect you to knowthe names and values of all the foreign moneys of account by
heart, now, did I, Alice ?
Alice : No ; but T thought we should be obliged to do so.
Mr. Bullion : You shall each be provided with a copy of Mr
.
Norman's Money Table, which gives all the particulars you can
possibly want, and then I shall expect you to make good use
of it.
Will : Bo let us begin this morning, father.
Mr. Bullion : I cannot possibly do that, Will, for I have to
go into Manchester almost immediately. But to-morrow morning
at eleven o'clock I shall be ready to give another lesson in the use
of "Norman's Single Grain System."
I have just ten minutes to spare you yet, I see (looking at
his watch), so I will put a question to you all. Can either of you
tell me the difference between the meanings of the two words
"Value" and "Price"?
Will : " Price " is what is given for a thing, and "value " is
what it is worth.
Mr. Bullion : Come, Alice, I hope you can give me a rather
better definition than that
!
Alice: You have already told us that "price" means a
definite weight of standard metal, father ; and as to " value,"
why, I suppose the value of any article we buy is shown by the
amount of standard metal we have to give for it ?
Mr. Bullion : You are right as to " price," but I cannot say
that your definition of " value " is much better than Will's, mydear. Now then, John, let us hear what you have to say
about it>
WHAT IS IT ? 95
John Smith : I confess to feeling very shakey on the subject, John's
sir, but I should define "value" thus: it is the relation of ae ni l0n "
commodity, article, or utility possessed by one individual, to the
need of another person.
Will : You're too grand for me, John. I can't understand
you.
John Smith : I'll try to make myself plainer. If I were
travelling in a desert, and had run short of victuals, I should be
ready to give my gold watch (if I possessed one) to the first
traveller I met with who was able to supply my need ; whereas
the price of the goods, if bought in a shop, would be something
very small compared to the price of a gold watch.
Mr. Bullion : Your definition is good as far as it goes. But Mr. Bullion'
I want to have no mistake in your minds as to the distinction definition,
between " Value " and " Price." Barter, as you know, preceded
the use of a standard of value and a means of payment. Under
a system of barter there was no such term as price. There are
two descriptions of value, viz., cost value, and exchange value.
Cost value is the sum of value-giving factors expended upon any- cost value,
thing. These value-giving factors are labour, land and water
(where rent is paid), shelter, machinery, interest on capital, and
any other factors costing anything, which have helped to makethe commodity or service exposed for sale or exchange.
Exchange value is that for which anything can be exchanged. Exchange
Let us suppose that I adopt the barter system, and exchange value.
Manchester shirtings for Indian wheat (I choose these two com- Barter and
modities for my examples, because you will have more to do with illustrated,
them hereafter). The amount of wheat that a Calcutta merchant
would offer me for, say, 1,000 pieces of Manchester shirtings,
would depend on the amount of labour and other value-giving
factors which he knew to have been expended on the production
of the wheat and the preparation of it for sale, compared with
the amount of labour and other value-giving factors which hadbeen expended on the manufacture of the shirtings.
Alice : I see that as plainly as can be, now.
Mr. Bullion : But suppose I determine to adopt the mone-tary system, and to sell my Manchester shirtings in India—nowcomes in price. It depends on the market price of shirtings in
India at the time of the sale, whether I receive in exchange for
my shirtings a weight of Indian standard metal (represented you
96 COIN OF THE REALM
:
Supply anddemand.
Monetarysystem does
not affect
principles of
barter.
must remember by standard Indian money) equivalent to the
cost value of the shirtings.
Will : Are cost value and exchange value the same thing,
father ?
Mr. Bullion : By no means. Sometimes a commodity that
is fashionable or in great request will fetch a far higher ex-
change-value than it would if its cost value alone were calcu-
lated : whereas the disclosures (for instance) made lately in
connection with the sweating system, show us only too plainly
that many working men and women are at present receiving
starvation remuneration in return for a vast expenditure of labour
and other value-giving factors. The exchange value of their
work is far below its cost value.
John Smith : I suppose the exchange value of everything is
regulated by the price it can fetch ?
Mr. Bullion : That is a question of what political economists
call " supply and demand "—the greater the demand the greater
must be the supply. Under a monetary system the greater the
demand for any particular commodity, the more likely that its
exchange value will be a price or weight of standard metal equiva-
lent to its cost value. But when you have studied political
economy you will find that the conditions of barter or exchange
are not supposed to have been in the slightest degree altered by
the later introduction of the monetary system. It is stated that
prices may rise and fall owing to certain causes which affect the
precious metals, but that the terms upon which.goods are
exchanged are governed by the principles of barter.
Chapter III.
Mr. Bullion had no cause to complain of any lack of interest
on the part of his pupils in " Norman's Single Grain System."
Several times during the day he overheard Alice and the boys
talking of it, and at eleven o'clock the next morning the three
young people were waiting for him, with their books and
pencils, all in a hurry to begin.
Mr. Bullion : Come, now, I call this punctuality. Although
WHAT IS IT ? 97
my school is small, it is very select, and my scholars show no
signs of falling off as yet.
Will : If all school work was like this, father, we should
not bumbug our masters nearly so much.
Mr. Bullion : You're a nice sort of fellow—to talk as if
masters must be humbugged unless they can make all your work
pleasant and interesting for you ! I call upon you, in conse-
quence, to answer the first question : How did you find out
what the denominational expression of a grain of fine gold is
in England, where gold is the only standard metal used for
money ?
Will : I have not forgotten how to do that yet. There are
240 pence in one sovereign, and there are 113-0016 grains of
fine gold in a sovereign on its issue from the Mint ; 240 divided
by 113 001 6 gives 2-123863 pence, and that is the denomi-
national expression, as near as we need reckon it, of one grain
of fine gold in the currency of the United Kingdom.
Mr. Bullion : You have really driven that into your head, I
see. Now, tell me, Alice, what use you have so far made of
this discovery.
Alice : After we had been shopping we divided each sum of
money we spent by the denominational expression in pence of
a grain of fine gold, and that gave us the price in grains of
fine gold of each thing we had bought,
Mr. Bullion : So far, so good. The hardest question falls to
John Smith's lot. In some countries—India, for silver—silver Denomina-
is the standard metal, not gold. How would you find out the tional expres-
„ . « ., t sionofagraindenominational expression of a gram of fine silver in India, f silver
John ? Take your time to think out the problem. in ^^a-
(John Smith walked about the room for a few minutes,
with his hands in his trousers pockets, and then returned to his
seat.)
John Smith : If only I knew how many grains of fine silver
there are in a rupee, I could do it, sir.
Mr. Bullion (smiling) : There are 165 grains of fine silver
in a rupee on its issue from the mint. Come, Alice and "Will,
set your brains to work ; John is on the right track.
(In a very few minutes John was ready.)
John Smith : There are 192 pies in one rupee, and 16.5 grains
of fine silver. So I divided 192 by 165, and find that 1-16363
7
98 COIN OF THE REALM:
pies is the denominational expression of a grain of fine silver in
India.
Mr. Bullion • Well done, John ; that is perfectly right.
Alice : I do think you must be very clever, John ; for I was
not a bit the better off for knowing how many grains of silver
a rupee contained.
Will : I could have done it quite easily if I had only knownhow many pies a rupee is worth.
Price of ar' ^u^on •' But that " if " made all the difference, Will.
grain of John has been studying the money question for some time now,
goldStandard an(* •" exPec^ y°u ^U nn(l that he knows a good many things
country. that you don't. The next problem, however, I think will stump
even our young friend. How can you find out the gold price
of one grain of fine silver in a country like England, where gold
is the standard metal ?
John Smith (after some minutes' thought) : I cannot makehead or tail of that problem, sir.
Mr. Bullion : It was not to be expected that you could, so I
will explain it without further loss of time. The first thing to
be discovered is the latest gold price of silver in London which
can be found out by referring to the daily papers. I saw this
morning, under the heading " London Stock Exchange. " Bar
silver, 44d."
Alice : How very strange, to buy silver by the pound !
Mr. Bullion : Silver is always quoted as being worth so
much per ounce. Yesterday, therefore, it was worth 44d. per
ounce. Bar silver is always reckoned to contain 444 grains of
fine silver in every ounce weight of metal, the other 36 grains
being alloy. And this is the way to solve the new problem :
Divide the 44d. by 444, and that will give you -099099 pence,
which is the gold price of one grain of fine silver in England
just now.
John Smith (after making a rapid calculation in his note
book): 165 grains multiplied by -099099 make 16-3513 pence,
so that was the price of an Indian rupee in England yesterday,
about 16^.Mr. Bullion : Just so
;you have a capital head for making
practical use of any fresh information you pick up, John.
Formerly silver was worth 60d. per ounce in England, so you
see it has declined greatly in price.
standardcountry.
WHAT IS IT ? 99
Alice : Let me guess what comes next, father. Isn't it, how Price of a
to find out the price of a grain of fine gold in a silver-standard f^in
a
country ? silver
Mr. Bullion: That is it, Alice. And what else can you
guess ?
Alice : That to do so we must first know the market price
of gold in that country.
Mr. Bullion : Capital, girl ! To-day India shall be our silver
standard, and England our gold standard country ; but, when
you understand these problems perfectly, I shall set you to
work out some exchanges between less well-known countries.
Gold is reckoned by the tola in India, a tola being 180 grains
of fine gold. Let us suppose the market price of gold in India
to-day to be 22 rupees, 14 annas, 3 pies per tola ; how many
pies is that?
Will : (grumbling) : It is these stupid old outlandish coins
that stump me.
John Smith .-12 pies 1 anna, 16 annas 1 rupee, Will.
(With this help Alice and Will were not far behind John
with their figures when he gave out as follows :)
John Smith: 4,395 pies, sir.
Mr. Bullion : Eight. Then what comes next ?
Will (speaking in a great hurry) : Divide it by 180.
Mr. Bullion : Quite correct, Will. Divide the 4,395 pies,
the price of a tola or 180 grains of fine gold, by 180, so as to
find out the price of one grain. Let Will do this sum, John,
you are too quick for him and Alice.
Will (after a short reckoning) : 24*4166 pies is the Indian
silver price of a grain of fine gold.
Mr. Bullion : Eight again, Will. By this time I am sure Price of a
you can easily find out the price of a British sovereign in Bl>itisn
T ,
.
sovereignIndia - in India.
Alice: By multiplying 113-0016 grains of fine gold, the
number contained in a sovereign, by 24-4166 pies, the price of
one grain, is it not, father ?
Mr. Bullion : Yes, to be sure. Who will have done that first,
Alice, or Will ? (To Will's great delight, he finished his sumbefore his sister).
Will (reading out his figures with a loud voice) : A British
sovereign is worth 14 rupees, 5 annas, 11 pies to-day in India.
100 COIN OF THE REALM
Proportionestablished
between goldand silver
in a goldStandard
country.
Oh, this is famous ! give us some shopping to do for you over
in India, do, father.
Mr. Bullion: Two more problems, and only two, remain,
which I want you to master before you will be quite fit to
undertake my foreign affairs for me. These two problems are
(1) How to find out the proportion established between gold
and silver in a gold standard country ; and (2) How to find out
the proportion established between silver and gold in a silver
standard country.
Will : Are we obliged to learn this before we can go on to
the interesting part ? I do not see what use it will be to us.
Mr. Bullion: Have a little more patience, Will, and I
think you will find out that this is a useful thing to know. Let
us first take—How to find out the proportion between gold and
silver in our own country. Divide the gold price of silver by
the denominational expression of one grain of fine gold ; do you
follow me ?
John Smith (jotting down some figures rapidly) : Yes, sir.
Divide 44d., which is to-day the gold price of one ounce of
silver, by 2* 123863d., the denominational expression of a grain
of fine gold. That comes to 20*71 grains of fine gold.
Will : How can that be ? You divide a larger number of
pence by a smaller number of pence, and then call the result
grains ! That won't do, Master John.
John Smith (laughing) : Won't it do, my young friend ? Let
us see : 2*123863d. represents one grain, doesn't it?
Will : Yes ; that is the denominational expression of one
grain of fine gold.
John Smith: Then, if 2-123863 goes into 44d. 20-71 times,
20-71 grains of fine gold is the price of an ounce of silver. Aha,
Master Will, I have you there
!
Will : So you have ; but you shan't catch me again in a
hurry.
Mr. Bullion : Now that John has decided that knotty point,
let me finish my problem. You must recollect that an ounce
of silver contains 444 grains of silver. Therefore, if 444 grains
of fine silver can be bought for 20 7 1 grains of fine gold, how
are you going to discover the proportion established between
gold and silver in this country ?
(John and Alice began speaking at the same moment ; so
r WHAT IS IT? 101
John immediately held his tongue, and allowed Alice to answer
her father's question.)
Alice: Divide 444 by 20-71, and that will give the
proportion.
Mr. Bullion ; Alice is quite right • she ran neck and neck
with John this time.
John Smith (who has meanwhile made the calculation) : 21*43
parts of silver go to one grain of gold in England just now.
Will : Does that mean that a grain of gold is worth nearly
21 1 grains of silver ?
Mr. Bullion ; Yes. And can either of you see how to apply
this knowledge of the proportion established between gold
and silver?
Alice (very hesitatingly) : I suppose if a merchant came over
to England from India, bringing a whole lot of silver with
him, he could find out how much gold it was likely to fetch by
dividing the number of grains of fine silver his money contained
by 21-43.
Mr. Bullion : You are quite right, Alice ; I am pleased to
find you are taking to this subject so well. Having found out
in this manner how much gold his silver was fully worth, the
merchant would next find out what percentage he would have
to pay for effecting the exchange—it would be something very
small—and then he would know what price he could get for his
silver.
Will : I now see the good of learning this, though I am long-
ing to go shopping in foreign countries.
Mr. Bullion : Well, we will get over the last problem now,
and to-morrow morning you shall go to India and do various
commissions for me.
John Smith (eagerly) : Do give me a few minutes, sir, so Proportion
that I may try to work out the proportion established between established
betweensilver and gold in a silver standard country : I think I can
s iiver and
do it. gold in asilvsr
Mr. Bullion (smiling) : "Well • go ahead, then. standard
Will : 1 am sure / couldn't do it ! (So he amused himself by country,
drawing pigs with his eyes shut, whilst Alice knitted her brows
and tried in vain to follow John's example. After ten minutes'
hard work John looked up triumphantly.)
John Smith ; I believe I have it all right, sir ; I like working
out these jolly sums.
102 COIN OF THE REALM
Mr. Bullion : Let us hear what you make of it.
John Smith: The price of 180 grains of fine gold is 4,395
pies—this I divided by 1*16363 pies, the denominational ex-
pression of a grain of fine silver, and it came to 3,775 grains
of silver.
Will : 3,775 grains of silver the price of 180 grains of gold !
John Smith : Just so. Then I divided the 3,775 by the 180
grains, and find that the proportion established between silver
and gold in India is 20*97 parts of silver to one of gold.
Mr. Bullion : Well done, John ! That was a sum requiring a
good deal of thought. But we have had a long sitting to-day,
and it is high time you all went out. To morrow morning at
eleven o'clock I shall be ready to send you all to India on mybehalf.
Chapter IV.
Commercialdealings
betweenIndia andEngland.
Will; Now, then, ladies and gentlemen, take your seats; the
boat is just about to start for H.M.S. " Salamander," and you
will be frizzling in Calcutta in another three weeks.
Mr. Bullion : Wait a bit, young man, you are too fast.
Please to recollect that I am a Manchester cotton manufacturer,
and until you have received a commission from me, you cannot
leave Manchester.
John Smith : Besides which, a man-of-war would not be the
kind of vessel in which you and your goods would be sent to
India, Will. I hope you will give me your commission, sir, for
I am much steadier than your junior clerk.
Alice : And what am I to do ? I will not be left out in the
cold!
Mr. Bullion : Dear, dear ! I do believe I shall have to let
all three of you go together ! Yes ; that will be my best plan,
and I will furnish each one of you with a separate commission.
Will : Shall we have to give the prices of everything in
grains of gold or silver?
Mr. Bullion : Most certainly, Will. Do not forget that the
reed price of everything that can be obtained for money, is a
WHAT IS IT P 103
commission.
certain weight of standard metal, and that all kinds of paper
money, and coins other than standard coins, are signs of these
standard weights. I hope you now remember the difference
between standard and token coins ?
Will : To be sure I do. A standard coin contains the full
weight of standard metal, and a token does not. But I tell you
what I do not know, father, and that is, how much a sovereign
weighs altogether with its alloy. I only know that it contains
113-0016 grains of fine gold.
John Smith: I can tell you. A sovereign weighs 123*274
grains troy; so that it contains about 10*27 grains of alloy.
Mr. Bullion: And an Indian rupee weighs 180 grains troy Alice's
—that is, 165 grains of fine silver and 15 grains of alloy. Now,
then, Alice, take down what I am going to dictate to you. I
will give over to your care 3,000 pieces of Manchester shirtings
(packed in 50 bales), at 7s. ll^d, per piece. The freight, in-
surance, and all other charges will cost you £53 2s., so you
must add that sum to the price of the shirtings. When you
get to Calcutta, a well-known firm whose address I will give you
will be ready to buy the shirtings of you at 5 rupees per piece,
and you will find that you will have to pay 3 per cent, for all
Indian charges, which you must remember to deduct from the
sum you make by the shirtings. What have you written down,
so far ?
Alice (reading) : Three thousand pieces of Manchester shirt-
ings, at 7s. ll^d. per piece; £53 2s. for expenses at starting.
The shirtings are to be sold at Calcutta for 5 rupees per piece,
less 3 per cent, for Indian charges.
Mr. Bullion : That is right.
Alice : Then, father, dear, may T ask a question before I
begin my sum?
Mr. Bullion : By all means, my dear.
Alice : I want to know what the expenses are that you spoke
of just now—freight, insurance, Indian charges 1 And whenyou were talking of an Indian merchant, yesterday, you said he
must find out what percentage he would have to pay before
parting with his silver in England.
Mr. Bullion: Your question reminds me that I have never
yet talked to you about "metal points ;" but it is very necessary
that you should understand the meaning of this term before
Metal points.
104 COIN OF^THE EEALM:
working out any foreign commissions for me. " Metal points"
is a technical term meaning the limits within which exchanges
may vary, the boundaries of these limits being the cost of send-
ing metal from one country to another, coinage, and other
charges. I -will just read to you a passage from Mr. Norman's
pamphlet on his " Single Grain System," referring to exchanges
between England and India, and his remarks apply equally to
all other foreign exchanges. He says :" The Daily News
quotation of the price of silver is not a sufficient guide alone to
the rate of exchange which you will find existing with India.
You must know whether India is requiring or parting with
silver. The knowledge of the par of exchange, and this know-
ledge combined, would enable you to make a good estimate of
the rate that should exist. To ascertain what the metal points
are, it is necessary to know the regulations of each mint in the
world—that is, the charge for coinage; the time occupied
between the presentation of the standard metal and its return
in the shape of coins by the mints ; the expenses connected with
packing and shipping the metal, and the extra length of time
requisite for the release of the coin from the mint to which it is
sent, over that occupied by the transmission of a bill, payable
on demand—these are essential items of information. This in-
formation, together with the knowledge of the par value between
countries of gold for gold, silver for silver, gold for silver, or
silver for gold, is the foundation of the exchanges, and should
be understood by everyone."
Alice (dolefully) : "Well, I did hope that we had learnt enough
to be able to do these foreign commissions right off; but now it
appears that there is a whole lot more to be learnt
!
Mr. Bullion (laughing) : You do look melancholy, to be
sure ! But cheer up, Alice ; I am not going to take any of
you into the mysteries of "metal points." That is a subject to
be studied by those who really make foreign exchanges—whether
in metal or commodities—the business of their lives. I will, in
all cases, tell each one of you what percentage you are to reckon
for expenses ; but it was necessary that you should understand
the meaning of these charges.
Alice : Thank you, father ; that is a great relief to my mind.
One more question, please. I suppose we are to reckon a rupee
to be worth Is. 4"35d., as John made it out to be the other
day?
WHAT IS IT ? 105
Mr. Bullion; No; I wish to put a fancy price upon our
rupee to-day, so that when you arrive at the next stage— that
of working out these foreign commissions entirely without help,
—you may not find half your calculations waiting for you at
your fingers' ends.
Will : Oh, father ; how very wily of you to make sure of not
giving us too much help !
Mr. Bullion : Yes, Master Will. After to-day you must
depend entirely on your own wits, for I shall not so much as
squeak until your papers are handed in, done or not done.
This morning, therefore, we will suppose silver to have risen
greatly in price, and everything shall be reckoned at the prices
which existed 14 years ago. Imagine a rupee to be worth
2265d., if you please, Alice ; and try to begin your paper whilst
I am talking to the others.
Your turn shall come next, Will, and then you can be "Will's
doing your paper whilst John and I are having it out. Write
down 3,000 pieces of Manchester shirtings, at 7s.ll£d. per piece.
Will : Oh, father, please don't give me the same order as
Allie ; there will no fun at all in that
!
Mr. Bullion : You are too ready to cry out, Will. I am not
going to give you the same commission as Alice, but you are
both to be entrusted with the sale of the same quantity of
shirtings at Calcutta, after which it will be interesting to see
which of you will realise the largest profits on your different
tran sactions, for instead of sending me the money, as Alice will
have to do, you, Will, are to invest the amount you make by
your shirtings in wheat, and then you will have to bring the
Indian wheat home to England and sell it for me.
Will (looking delighted) : Hooray ! that's something like a
commission. I shall like doing that, father, very much,
Mr. Bullion: Well; put down £53 2s. at starting for the
freight, insurance, &c. of your Manchester shirtings, and then
go with Alice to my friends' house of business, and sell the
shirtings at five rupees per piece, less 3 per cent, for all Indian
charges. So far, you and Alice will be together, and you will
be her natural protector, I hope.
Alice (looking up from her paper and laughing) : Father,
dear, you look quite grave, and talk as if I was really going out
of the country, and likely to require a protector.
106 COIN OF THE EEALM :
Mr. Bullion : To be sure I do, otherwise there would be no
moral to my tale. When the shirtings are disposed of, Alice
will only have to arrange about remitting the money to methrough a Calcutta banker, to whom I shall give her a letter of
introduction. Hullo, though ! We have said nothing about
sending home the money, have we, Alice ? The expenses of
sending the silver to England and selling it in London must be
reckoned to cost 1 per cent.
Alice : Well, luckily, I had not arrived as far as sending
home my silver yet.
Mr. Bullion : Make a note of that 1 per cent., so that you
may not forget it. Well, Will, my boy, the next part of your
programme will be, that as soon as you have been paid so manyrupees for your Manchester shirtings, you must invest your
silver in a cargo of wheat. You may reckon the price of your
Indian wheat to be 16*12 rupees per quarter, including freight
to England and all charges.
Will (writing busily) : Woa, please, father ; I haven't quite
done. Indian wheat to be bought at 16*12 rupees per quarter,
all charges included. You give one rather hard sums, I must
say, father.
Mr. Bullion : On your return to England you are to sell the
Indian wheat for me at 35s. per quarter (does not the English
farmer wish he could command that price for his wheat!) ; and
from the sum you realise by the sale of the wheat, you will
have to deduct 2 per cent for London charges. There's your
commission, Will.
Will : And a mighty long one it is ! but I mean to tackle it.
Mind you give John a stiff lot of it, won't you, father ?
Mr. Bullion : If you don't take care, John will soon over-
take you, even with a paper much harder and longer than
either yours or Alice's. I warn you, John, that I am going to
quote all sums of money and prices of commodities in grains of
standard metal, which you must turn into pounds, shillings,
pence, and rupees, when doing your paper.
John Smith : That ought not to take me any longer than
turning the coins named into standard metal.
Mr. Bullion .* No ; I do not think it will hinder you. Your
work for me will not begin until you have arrived in India *
so I hope you will keep an eye on my young people, and be
commission.
WHAT IS IT P 107
ready to lend a helping hand, or, rather, a helping brain, when
wanted.
John (laughing) : All right, sir.
Mr. Bullion : Well, once you are in India, the first thing I John's
wish you to do is to call on my Calcutta banker, and ask him
to make known to you some reliable Indian wheat merchant.
By the time you get to Calcutta my banker will have heard
from me, and will be ready to assist you in this manner, and also
to let you draw upon him for the amounts you will require for
my commissions. Having been directed to a wheat merchant,
you are to give him an order for 2,707*62 quarters of wheat,
for which he will charge you 2,600 grains of fine silver per
quarter ; this charge to include shipping and all other expenses.
John Smith: Will the merchant undertake to send the
wheat to England for me, then ?
Mr. Bullion: Yes; it will be safely shipped without any
more trouble on your part. But the purchase of the wheat
will only be the beginning of your work. I will give you the
address of a London agent, whom you can employ to sell your
wheat for you in the London markets. He is a capital man,
and will observe any directions you give him implicitly. Assoon as the wheat is bought, you must write to this agent
and desire him to receive the wheat, and to sell it for you at
197*572 grains of fine gold per quarter. The proceeds of the
sale you must arrange to have sent out to you in three
different forms.
John Smith : My London agent will require an angelic dis-
position if he is to take all this trouble for me.
Mr. Bullion (smiling) : Very well, then, we will conclude
that such is the case, for these instructions must positively be
carried out. (1) One-third of the proceeds of the sale is to be
remitted to you through a London banker in the form of gold
;
it will reach you less f per cent, for carriage and other charges,
and you will have to convert the gold into silver. ('<?) Youare to desire your London agent to invest another third part of
the wheat-money in silver, and to send that commodity out to you.
The charges for shipping, brokerage, packing, and freight will
be only £ of 1 per cent., but on its reaching India you will have
to pay for coinage charge 2£ per cent., and other charges £ of
1 per cent.—2£ per cent, in all.
108 COIN OF THE REALM
:
Will: My word ! isn't father giving you a long sum, John
!
John Smith (shaking his head) : It sounds an awful lot of it,
I must say.
Mr. Bullion : You won't find it too much for your long head
when you come to do it, I hope. At all events we have reached
the last item. The remaining third part of the proceeds of your
wheat sale is to be invested in Manchester shirtings, at 46-8475
grains of fine gold per piece, the price to include freight and all
charges to India. When you receive these pieces of Manchester
shirtings, be good enough to sell them for me at 825 grains of
fine silver per piece, and let me know what profit you makeupon the transaction after paying 3 per cent, for all Indian
charges. There, John, when you come to write out the
problems in order, I do not think they will frighten you much.
Now, put away work, all of you; you may have a good, go at
them this evening before supper time, and recollect, I am willing
to give help if required.
Chapter V.
(John Smith and Alice and Will Bullion are waiting to hear
the result of their work last night. Their papers were placed
upon the study table before breakfast, and they are wandering
about the garden listening for the signal agreed upon. At last
Mr. Bullion opens the window and whistles, whereupon the
three young people scamper into the house and arrive breathless
in the study.)
Report on Mr. Bullion ; You have all done your papers so remarkably
well that I have decided on giving you a set of questions to
work out, with the help of Mr. Norman's " Tables," before wetalk over these Indian commissions. Let them, therefore, form
part of your examination papers.
Will : So we haven't made any mistakes this time, father ?
Mr. Bullion : Hardly any, Will—just a few slips of the pen.
Your work shows that you have, each one of you, grasped the11 Single Grain System," I am glad to say.
commissions.
WHAT IS IT ? 109
Alice : It is a comfort to know that we have not done badly,
at all events.
John Smith : But what I now want to know, sir, is why you Ordinary
think this way of working? out foreign exchanges better than the meth°<is of
,,,.,. . -nT iworking out
ordinary method, which is very simple? For instance, .3,000 foreign
pieces of shirting at 7s. ll^d. per piece comes to £1,190 12s. 6d. exchanges.
Freight, &c, to India, £53 2s.—£1,243 14s. 6d. in all. The
shirtings are sold at Calcutta for 5 Rs. per piece, a rupee being
reckoned worth 22'65d. You reduce £1,243 14s. 6d. to pence,
and divide by 22-65d. ; the answer is in rupees. Deduct 3 per
cent, for Indian charges, and there you are.
Mr. Bullion : Yes, there you are, no doubt ; but there isn't Single grain
one ordinary person in a hundred to whom the answer, given in system.
rupees instead of in English money, conveys any idea as to -weights of
whether you gained or lost by the transaction. But when you standard
put it in my way—Manchester shirtings, bought in England for a giance .
so many grains of fine gold, and sold at Calcutta for so manygrains of fine silver, for which you can command so many grains
of fine gold—you see at a glance whether you have lost or gained
by the transaction, by comparing your two weights of fine gold,
which are the real prices of your commodities.
John Smith : I see that, now.
Mr. Bullion ; The same rule applies to all countries where
there is a standard currency—America, China, Germany—no
matter with which of them you wish to effect a monetary
exchange, or to deal commercially. The "Single Grain System"
shows you at once the comparative weights of standard metal
to be paid or received. One more application of the " Single
Grain System " I wish to make clear to you before handing
you Mr. Norman's w Tables " and giving you your examination
questions.
John Smith : Is it about the quotations of foreign exchanges
in the daily papers, sir ? For I have been longing to under-
stand those quotations.
Mr. Bullion ; Then, I am glad to say that is the very matter Foreign
I wish to explain to you. Under the heading, "American exchanges
Markets," you will find in most daily newspapers three quotations,
dated from New York, namely: (1) Exchange on London
(sixty days' sight); (2) Exchange on Berlin
; (3) Exchange on
Paris (sixty days). Here is my morning paper. Let us take
110 COIN OF THE EEALM
the first quotation : " Exchange on London at sixty days' sight,
Exchange on 4*86£." This message was telegraphed from New York yester-London. day, to let business people know what was the rate of exchange
between the United States, America, and England on that day.
What is the money of account in America ?
John Smith : I suppose it is a dollar.
Mr. Bullion: Yes; a gold dollar of 100 cents, as you will
find by referring to Mr. Norman's "Tables" by-and-bye; and
each gold dollar contains 23*22 grains of fine gold.
Alice : Then a dollar is worth ever so much less than a
sovereign, father.
Mr. Bulllion : A good deal less, Alice. The first point you
have to remember is that the figures 4*86§ must represent either
American dollars or a British sovereign, or parts of a sovereign,
because the exchange is between the United States of America
and England.
Will: This is dreadfully difficult, isnt it ?
Mr. Bullion : Not a bit of it : you will understand all three
quotations perfectly in the course of a few minutes, if you will
give me your full attention. The money of account in England,
a sovereign, contains 113 grains of fine gold ; the American
money of account— a gold dollar, contains 23*22 grains of fine
gold. How many dollars do you think you could get for a
sovereign ? How many times will 23*22 go into 113 ?
Will : Quite four times, I should think.
Mr. Bullion : Very well. Then we will conclude that 4*86|
represents the dollars and parts of a dollar that America was
giving yesterday per British sovereign. We can soon prove it.
Divide 4*86f, that is, 4*8675, by 4*3066 cents, which is the
denominational expression in America of a grain of fine gold.
Give us the result, John, as soon as you can.
John Smith (after a few minutes' work) .* There are 113*024
grains of gold in 4*8675 dollars, sir.
Mr. Bullion : Quite right. The whole numbers, you see,
are the same as those contained in our sovereign, subtract 1 13*001
from 113*024.
Alice (after scribbling in great haste) : I've done it, father,
•023 remains.
Mr. Bullion : Very well : your result shows that yesterday
America was paying England a very small premium—about \ per
WHAT IS IT? Ill
mil—for gold. The quotation, therefore, reads thus :" At New
York, yesterday, the exchange on London was at the rate of
113-024 grains of fine gold for 113-001 grains.
John Smith : But how did you get at the premium paid by
America, which you say is about \ per mil ?
Mr. Bullion : How do you multiply decimal figures by
1,000?
John Smith : By moving the point three places to the right.
Mr. Bullion: Quite so; this would convert '023 into 23-000
grains. Divide the 23-000 grains by 113-001, the number of
grains contained in a sovereign, and the result will be -2 grains ;
that is, ith per mil.
Will : It is not so very difficult, after all.
Mr. Bullion (smiling) : Somehow, things never are so hard Exchange on
when once you understand them, Will. Sometimes, however,
the rate will express grains of metal in a fractional part of the
money of account of one country, for a definite number of the
moneys of account of another country. This is the case when
the exchange on Berlin is quoted. If you look at Mr. Norman's
" Tables," you will see that the money of account of Germany
is a gold mark containining 5-531 grains of fine gold ; whereas,
the American money of account contains 23-22 grains, more
than four times as many grains. The quotation to-day is,
u Exchange on Berlin, -95^." Let us conclude that New York
was yesterday giving -95| dollars, that is, nearly ^th less than
one dollar, for four German marks. Now, Will, find out how
many grains of gold there are in 95J dollars?
Will: I know how to do that: divide^ -95250 by the
denominational expression of a grain of gold in America, that
is, by 4-3066 cents.
Mr. Bullion: Make haste about it, then; and you, Alice
meanwhile find out how many grains of fine gold there are in
four German marks.*
(Alice was ready first, and was going to read out her figures;
but Mr. Bullion held up a warning finger, and made her wait
until Will's sum was completed.)
Mr. Bullion : Will's sum must come first. What do you
bring it to, my boy 1
Will : There are 22-117 grains of fine gold in -95£ dollars,
father.
112 COIN OF THE REALM:
Alice (looking pleased) : And there are 22-125 grains of fine
gold in four German marks. Isn't that very nearly the same ?
Mr. Bullion : Very nearly, indeed. Subtract the latter from
the greater number of grains, and see what remains ?
John Smith (after putting a few figures rapidly) ; *008, or
8 per mil. Divide this by 22*117, and the result is -3 per mil.
That's the discount that America was charging Berlin, is it
not, sir ?
Mr, Bullion : You are quite right, John.
Exchange on Alice (eagerly) : And now, father, dear, do let me try to
shew you what I have learnt. Please lend me the paper, and
let me see what the " Exchange on Paris," is.
Mr. Bullion : Here it is, Alice ; let us hear what you can
make of it.
60 days' Alice (reading) : " Exchange on Paris at 60 days' sight,
sight. 5.20." Oh ! father, I do not know in the least what this means—" at 60 days' sight."
Mr. Bullion : It means nothing that will interfere with your
calculations, Alice ; but simply this : if a New York banker is
sending money for one of his depositors to a Paris banker, he
makes his money order payable at 60 days' sight ; that is, the
order (in whatever form it inaybe sent) canMjCpe, cashed in
Paris until 60 days after^uvtfcas "seen in ITl WCTIfc. Now,
go on with your interpretation of the quotation.
Alice : I find by Mr. Norman's " Tables " that there are
23-22 grains of fine gold in an American dollar; but only 4-480
grains of fine gold in a gold franc, which is the French money of
account ; so I think the quotation must mean 5*20 francs for an
American dollar. John, please find out quickly for me howmany grains of gold there are in 5-20 francs :—A franc is worth
100 cents., and the denominational expression for a grain of fine
gold in France is 22*320 cents.
Mr. Bullion (laughing) : I do not know 'that I ought to let
John do your work for you.
Alice : Oh ! it's quite fair, father • I know how to do it
—
divide 520 cents, by 22-320 cents.—only I should not do it
nearly so quickly as John.
John Smith: Here you are, Miss Bullion. There are 23-29
grains ; call it 23-30 grains of fine gold in 5 "20 francs.
Alice (delighted) : Then I am right, for that is as nearly as
WHAT IS IT ? 113
possible the same. America was paying 23*30 grains of gold
for 23*22 grains ;-08 more grains for every dollar.
Will : And how much is that per mil, Allie ? Come now,
you will have to finish the sum, you know.
John Smith .* 23*22 divided into 80 ; that is just 3 dollars
per mil.
Alice : America was yesterday paying France a premium of
3 dollars per mil. Thank you for your help, John. Now, wasI not quite right, father ?
Mr. Bullion : Perfectly right, my dear. I am very muchpleased at the manner in which you applied what I had just
taught you. I believe I have now explained to you everything
which you ought to know before undertaking the examination
paper I have prepared for you. Here is a copy of questions
for each one of you, and three copies of Mr. Norman's " Tables,"
by the help of which you will, I hope, be able to solve all
the problems. Do them as carefully as you can, and take
your time about them.
(Exeunt John Smith, and Alice and Will Bullion.)
114 COIN OF THE REALM
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WHAT IS ITf 115
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(Concluded.)
116 COIN OF THE REALM
TJie following questions were published May 12, 1888, in the
" Children's Page " of f The Co-operative News." Prizes
were offered for the three best sets of answers, the com-
petition being open to those sons and daughters of co-
operators who were under 20 years of age :—
Questions.
Examination *• Explain the meanings of the following three terms :
—
questions. (1) Unit of value; (2) money of account; (3) unlimited legal
tender.
2. What is the difference between standard and token
coins % Explain this fully.
3. What is the difference between a mono-metallic and a
bi-metallic currency ?
4. Give your definitions of the words " price " and " value.''
5. Prove that the denominational expression for 1 grain
of fine gold in Great Britain is 2-123863 pence.
6. Prove that the denominational expression for 440 grains
of fine gold is £3 17s. 10|d.
7. What is the denominational expression for 7,000 grains
troy, or 1 lb. avoirdupois of fine gold?
8. Find the denominational expression for a grain of gold in
a gold-standard country (not Great Britain).
9. Find the denominational expression for a grain of silver
in a silver-standard country (not India).
10. Find the price of a grain of gold in a silver-standard
country, and the price of a grain of silver in a gold-standard
country, on the price of 35 pence per standard ounce of silver,
11. Find the proportion established between gold and silver
in a gold-standard country, and between silver and gold in a
silver-standard country, on the price of 42 pence per standard
ounce of silver.
12. Work out in grains of the standard metals the commis-
sions given by Mr. Bullion to his son and daughter and to John
WHAT IS IT ?117
Smith, in chapters iv. and v., second series. Show the loss or
gain per cent, on each transaction.
13. Work out the same commissions as those referred to in
question 12, in the same manner, at the following prices :
—
Piece Goods (shirtings) bought in Manchester.
3,000 pieces, at 7s. lOfd. per piece, including all charges to
India.
Sale of Shirtings in India.
3,000 pieces sold over the ship's side, at Es.5 lias. lips,
per piece. A rupee to he reckoned worth 16|d. English
money.
Purchase of Wheat in India.
784J quarters of wheat, at Its. 19 la. 2ps. per quarter.
Freight to Great Britain, 4 s. per quarter.
Sale of Wheat in Great Britain.
784| quarters of wheat over the ship's side, at 31s. 6d. per
quarter.
14. Give the price of a British sovereign in ten silver-
standard countries ; and the price of a Mexican peso in ten
gold-standard countries, on the price of 58£ pence per standard
ounce of silver.
15. Look out in a recent daily newspaper (of which you
should give the date) the three quotations of exchange given
under the head of "American Markets," namely, (1) Exchange
on London; (2) Exchange on Berlin; (3) Exchange on Paris-
Two prices will be quoted in each case for two successive days.
Work out the three quotations, and give the six weights of fine
metal indicated by them.
Answers to Examination Questions.
1. (1) "Unit of value" is a certain weight of a standard Answers to
metal, but it is not always made up into a standard coin.examination
J * questions.
(2) " Money of Account " is a number by which we may express
the worth or value of an article. Suppose a two-shilling piece
were the money of account in England, and we wished to express
the value of an article, we should say that the article was worth
118 COIN OF THE REALM
so many florins, or * parts of a florin. (3) "Unlimited legal
tender " is the name which is given to a metal when it is madethe monetary standard of a country ; but it must be received in
unlimited quantities at the mint, and must be fitted for regular
currency. (No. 78, Class L, J.D.)
3. Gold is the standard metal of England ; the silver andbronze coins are tokens, i.e., they only represent so muchstandard metal. A token only represents so much standard metal,
whilst a standard coin really contains what it represents. (No. 83,
Class I. J.D.)
3. A mono-metallic currency means having a single standard
coin, that is, adopting one standard metal, either gold or silver,,
for coinage of unlimited legal tender. A bi-metallic currency
means having a double standard coin, that is. allowing both gold
and silver to circulate freely, and to be coined in unlimited
quantities. (No. 1, Class II., J.D.)
4. "Price" means a definite weight of standard metal,
represented by standard coins or their tokens. An article
may or may not be worth the price given or demanded for it.
(E. C. S.) "Value": This can be defined as the relation of a
commodity, article, or utility possessed by one individual
to the need of another person. For instance, suppose a manhas a pair of boots that he wants to get rid of, and changes
them for two pairs of shoes. He makes an interchange without
having anything to do with price. Barter is largely practised
in the world still, and is always the basis of trade, though price
be the instrument. There is a cost value and an exchange
value, measured by value-giving factors (such as labour,
interest on capital, machinery, &c.) apart from price. The two
pairs of shoes may have cost less than the one pair of boots, or
vice versa, but the exchange value of them was the pair of boots.
Again, price may vary immensely, but the exchange relation of
substances embodying value-giving factors may remain constant.
(The first sentence is by No. 1, Class II., S.D. ; the rest of the
answer by Mr. Norman.)
5. A sovereign contains 240 pence, and, according to Mr.
Norman's " Tables," it contains about 1130016 grains of fine
gold. Therefore, the denominational expression for one grain
of fine gold will be the number of pence (240) divided by the
number of grains (113-0016), which comes to 2*123863 pence.
WHAT IS IT? 119
6. The denominational expression for 440 grains of fine gold
is obtained by multiplying 2-123863 pence by 440. Answer :
£3. 17s. 10£d., nearly.
7. The denominational expression for 7,000 grains of fine
gold will be 2-123863 pence multiplied by 7,000. Answer:
£61. 18s. ll-041d. (Answers 5, 6 and 7 by No. 1, Class II.,
J.D.)
8. In the United States of America, there are 23-22 grains,
of fine gold in one dollar, the value of a dollar being equiva-
lent to 100 cents. Divide 100 cents by 23-22 grains. The
answer is 4-3066 cents, which is the denominational expression
for a grain of fine gold in the United States of America.
9. In Cochin China, there are 378 grains of fine silver in one
piastre, the value of a piastre being equivalent to 100 cents.
Divide 100 cents by 378 grains. The answer is -2645 cents,
which is the denominational expression in Cochin China for a
grain of silver.
10. (1.) The price of a grain of gold in a silver-standard
country depends upon the market price of gold in that country.
If we suppose the market price of gold in India to be
Es.19 la. 2p. per tola (or 180 grains of fine gold), then one grain
of gold in India would be worth 20-34 pies. To do this, reduce
Es.19 la. 2p. to pies, and divide the pies by 180. (2.) Wemay find the price of a grain of silver in a gold-standard
country thus : Take the market price of silver in England to be
35 pence per standard ounce, or 444 grains of fine silver.
Divide 35 pence by 444, and the result is -07882 pence, which is
the price of one grain of silver.
11. (1.) Taking the value of silver in London at 42d. per
standard ounce (or 444 grains of fine silver), 42d. divided by
2-123863d. gives 19-77, i.e., 19-77 grains of gold for 444 grains
of silver. Therefore, 444 divided by 19-77 gives the propor-
tion of 22-45 grains of silver to one grain of gold. (2.)
Supposing the price of gold in India to be Es.19 la. 2p. per
tola, and a tola equals 180 grains of fine gold: Es.19 la. 2p.
equals 3,662 pies. Therefore, 3,662 pies divided by 1-16363
pies {i.e., the denominational expression for a grain of silver! in
India) gives 3,147 grains of silver; and this divided by 180
gives the proportion of 17*48 grains of fine silver to one grain
of fine gold. (By No. 1, Class II., J.D.)
120 COIN OF THE EEALM
12. Alice Bullion's commission .- The right way to do this is
to find out how many grains of gold were given for 3,000 pieces
of Manchester shirtings : the answer is 134,542-576 grains.
Then add 6,000 grains to the cost of the shirtings—being the
sum spent on charges for shipping, &c.—this brings the numberof grains of gold to 140,542-576. For the second part of Alice's
commission, 3,000 pieces of shirtings sold at the rate of Ks.5, or
825 grains of silver. This comes to 2,475,000 grains of silver.
Deduct 3 per cent, for Indian charges (that is, 74,250 grains of
silver), and the result is 2,400,750-5 grains; then deduct one per
cent, for shipping, &c. (24,007*5 grains) and 2,376,742*5 grains
of fine silver remain. A rupee is worth 22'65d., or 10*664
grains of gold per 165 grains of silver. Divide 165 by 10-664,
and the proportion will be 15*472 grains of silver to one grain
of gold. Divide 2,376,742-5 grains of silver by 15*472, and the
result will be 153,615-72 grains of fine gold. This is what the
3,000 pieces of Manchester shirtings realised in India, when all
expenses had been deducted, including remitting the money to
Mr. Bullion from Calcutta. "What was the gain per cent. ? The
difference between 153,615*72 grains of gold, and 140,542*57
grains (the price of the Manchester shirtings in England, in-
cluding all costs) is 13,073*15 grains; this latter amount of
grains multiplied by 100 comes to 1,307,315. Divide by
140,542*57, and the result will be 9*3 per cent.
Will Bullion's commission: Rs.14,550—2,400,750 grains of
silver, to be invested in Indian wheat, at the rate of Us, 16* 12,
or 2,659*8 grains of silver per quarter ; 2,400,750 divided by
2,659*8, shows that 902 '6 quarters of wheat were bought at this
price, all expenses included. The wheat was to be sold in
England at 35s. per quarter, and 2 per cent, deducted for
London charges. Divide 35s. or 420d. by the denominational
expression for a grain of gold. This comes to 197*942 grains of
gold. 902*6 quarters of wheat at 197*942 grains of gold per
quarter realise 178,662*4492 grains of gold. Deduct 2 per cent.
(3,573*2488 grains of gold), and 175,089*2 grains remain.
What is the gain per cent.? 140,542*576 deducted from
175,089*2 leaves 34,546*624 grains of gold. Multiply 34,546*624
by 100, and divide the result by 140*542*576 : this shows that
the profit made on the Manchester shirtings was 24*5, or 24^
per cent.
WHAT IS IT ? 121
John Smith's commission : 2,707-62 quarters of Indian wheat,
at 2,660 grains of silver per quarter, equals 7,202,269*2 grains
of silver. Divide this by 15-472—the proportion established
between gold and silver—and the result will be 465,503*438
grains of gold. This, divided by 113*0016 (the number of grains
of gold in a sovereign), brings £4,119*44, that is, about
£4,119 8s. To bring the sum out in rupees, divide the grains
of silver by 165, and the result will be Rs.43,650. 2,707*62
quarters of wheat to be sold in England at the rate of 197*572
grains of gold. This sale realises 534,949*89864 grains of gold.
Divide by 113*0016, and you will have £4,733 12s. as nearly as
possible. What is the gain per cent. ? Deduct £4,119 8s. from
£4,733 12s. : the result will be £614 4s. or 614*2. Multiply
this by 100, and divide the result by 4,119*4. This will show
a profit of 14*9 per cent. Divide the sum total into three equal
parts. 534,949*89864 grains of gold, divided by 3, equals
178,316*632 grains of gold, or £1,578. One-third of the sumtotal is to be remitted to John Smith in the form of gold through
a London banker, less f per cent, for carriage and other charges
;
and the gold will have to be converted into silver. To deduct
f per cent, divide 1,783*166 (which equals 1 per cent.) by 4, and
subtract the result from 1,783*166. The result will be 1,337*376
grains of gold, to be subtracted from the original one-third.
This will leave 176,979*256 grains of gold, and this, divided by
113,00*16, gives £1,566*16, or £1*566 4s. Multiply by 15*472
to convert the gold into silver grains : the result will be
2,748,222-948 grains of silver, or Ks.16,6558. One-third was
to be invested in silver by the London agent, and shipped to
Calcutta. £1,578, or 178,316*632 grains of gold, equals
2,758,914*93 grains of silver. Deduct | per cent, for shipping,
brokerage, &c, and you have 2,755,466*54 grains. Deduct 2\
per cent, for Indian coinage, charge, &c. : the result will be
2,689,329*88 grains, or Ks.16,280. 2,689,329-88, multiplied by
15,472, equals 173,819-35 grains of gold; and this, divided by
113-0016, gives £1,538-2, or £1,538 4s. One-third of the money
was to be invested in Manchester shirtings, at 46*8475 grains of
fine gold per piece, the price to include freight and all charges
to India. £1,578, or 178,316*632 grains of gold, to be invested in
Manchester shirtings, at 46*8475 grains of gold per piece, equals
3,808 pieces of shirtings. These, sold at the rate of 825 grains
122 COIN OF THE REALM :
of silver, or Us.5 per piece, realise 3,141,600 grains of silver,
or Es. 12,979-339. Less 3 per cent, for Indian charges, equals
3,047,352 grains of silver, or Rs.12,587'9 ; or 197,60548 grains
of gold, or £1,748-6, or £1,748 12s. And now we want to find
out the gain per cent, on the whole of the transaction.
£ s. d-
First sum, remitted to Calcutta in the form of gold 1,566 4
Second sum, remitted to Calcutta in the form of gold 1 ,538 4
Third sum, invested in Manchester shirtings, whichwere sold at Calcutta 1,748 12
£4,853
Deduct the original sum invested in Indian wheat, namely,
£4,119 8s. from £4,853. £733 12s. is the profit made. Whatis the gain per cent. ? To find this, reduce the two sums
>
£4,853 and £4,119 8s. to pence; multiply the former by 100,
and divide it by the latter sum. The result will show a gain of
17*8 per cent, on John Smith's transactions.
Question 13 was not correctly worked out by any of the
competitors.
14. (1.) The price of a British sovereign in ten silver-
standard countries : The right way to do this is first to find the
proportion established between gold and silver on the price of
58£ pence per standard ounce of silver: this will be 16-119
grains of silver to one grain of gold. Multiply 113-0016 grains
of gold (the contents of a sovereign) by 16-119, and you will
find that the price of a sovereign in grains of silver is 1821-472
grains of fine silver in England. Look out in Mr. Norman's'* Tables " the denominational expression of a grain of silver in
each of the ten silver-standard countries you choose for your
examples. Multiply 1821-472 by the denominational expres-
sion of a grain of silver in each of those countries, and the
results in each case will be the price of a British sovereign in
the standard money of account of that country. None of the
competitors worked these sums quite in the right way, though
I hoped that the working of question 1 1 would have led to their
doing so. Agnes Obee worked out the prices of the sovereign
WHAT IS IT ? 12$
rightly, though she did not get at the value of a sovereign in
grains of silver by the best and shortest rules. Walter Ansell's
answers to this question were also well done, and William
English's fairly well.
(2) To find the value of a Mexican peso in ten gold-standard
countries : Divide 377-058 (the contents of a Mexican peso in
grains of silver) by 16*119, and you will find that the gold
price of a Mexican peso is 23*392 grains of fine gold. Look
out in Mr. Norman's " Tables " the denominational expression
of a grain of gold in each of the ten gold-standard countries you
choose for your examples : Multiply 23*392 by the denomi-
national expression of each of those countries, and the result in
in each case will be the price of a Mexican peso in the standard
money of account of that country. These problems have been
worked out quite correctly by Agnes Obee ; and although
Walter Ansell went to work in a more round-about way, he has
brought out good results.
15. Agnes Obee and Margaret Riddell worked out the ex-
changes on London and Paris quite correctly. William English
was right as far as he went, but did not say what was the
premium given or discount charged by America. I think it
will gratify all those who took part in this examination to hear
that Mr. Norman has asked to be allowed to keep all the papers
sent in, so that he may be able to shew them to the friends,
who are interested in the subject.
E. C. SHABLAND.
124 COIN OF THE EEALM : WHAT IS IT ?
Report of the Examination taken part in by Members of
the Junior Co-operative Club, Midsummer, 1888.
Keport of
examination.
[S.D. means " Senior Division," and is used by members
over 14 and under 20 years of age. J.D. means " Junior Division,"
and is used by members under 14, but over 8 years of age.]
First Prize: "Advanced Studies of Flower Painting," by
Ada Hanbury. Won by Agnes Obee, of Plumstead, Kent
(aged 12 years).
Second Prize: "Money," by Professor S. Jevons; and
"The Old Curiosity Shop," by Charles Dickens. Won by
Walter Ansell, of Coventry (aged 13£ years).
Third Prize : Scott's Poetical Works. Won by Margaret
Riddell, of Landport, Portsmouth (aged 12| years).
Marks Gained.
No. 1, Class II., J.D. (last term)
No. 3, „ I-, „No. 86, n L
> »No. 83, n I-, „No. 1. „ II., S.D.
No. 78, „ L, JD.No. 32, „ L, „No. 34, „ JJL, S.D.
40 m id31 >>
30 >>
20 ?>
18 »17 j>
13>>
10 n
The result of the examination on the whole has given both
Mr. J. H. Norman and myself great pleasure and satisfaction
Agnes Obee's papers are remarkably good. It was really not
to be expected that so young a girl should take up the papers;
but she has done by far the best set of answers. Walter
Ansell and Margaret Riddell have also done splendidly ; and
the papers by William English, of Hopedale, by Falkirk, N.B.
—a non-prize competitor—deserves very special commendation.
APPENDIX.
APPENDIX. 127
CONTENTS OF APPENDIX,
To the General Reader, pages 131 to 135.
Quotation from Mr. Wm. Horsley's introduction to the " UniversalMerchant" on the importance of legislators possessing a masterly skill in
million and coin—The duty and privilege of all to add to monetary science
—
Baron Cotton on Queen Elizabeth and her edict on conquering the monster,i.e., the variation of the standard—The foundation of monetary metallism,
the difference between value and price and the necessary conditions of a
standard, within the grasp of children—The method of quoting exchanges,baffling and perplexing—No alteration expected—The exchange calculus of
great value as an educational instrument, for travellers, merohants, sailors,
and soldiers—Mr.Alex. L. Glencross's constants—The importance of thoroughlyunderstanding the concrete case of the interchange of Manchester piece goodsfor Indian wheat—Four- fold object of the pamphlet—What are the differences
between the raising of the coins, bi-metallism, and the excessive issue of
inconvertible paper?—Dr. Patrick Kelty's Universal Cambist—Sir JohnSinclair's opinion upon Kruse's Hambro Contorist.
An Antidote to Bi-metallism, or Local Dual Standards, written forthe Inaugural Meeting of the Bi-metallic League, held in theMansion House, London*, in March, 1882, by John Henry Norman,pages 136 to 140.
Definition of Bi-metallism and Mono-metallism—Ricardo on the exchangevalue of gold and silver being governed by their cost value—J. S. Mill onthe same—-A simple common sense axiom to guide the mind clear of the Bi-metallic theory— Twelve reasons against the practicability of workingpartially or universally the local dual standard theory—The views of
Professor Stanley Jevons, and Bonamy Price upon the subject.
Memorandum on the Cause or Causes of ; 1st. The world-wide fall inthe gold pkice of silver and the rise in the silver price of gold.2nd. The fall in the prices of Commodities generally in GreatBritain since 1873, prepared at the reciuest of Lord Herschell byJohn Henry Norman for the Gold and Silver Commission of 1880-Sin November, 1887, pages 141 to 152.
Professor Dr. A. Soetbeer's opinion of the "elemental might" of weightsof standard metals—Results of an effective metal standard—Concrete case ofexchange of Manchester piece goods for Indian wheat through the instru-mentality of gold and silver prices illustrating the elemental might ofstandard metals, the conditions of value, and the conditions of price
—
Reasons for asserting that the fall in gold price of silver is due to theclosure of certain mints against the unlimited reception of silver—Thepresent average comparative cost of the production of gold and silver—Theevidence of Professor Roberts-Austen of the Royal Mint of the averagegold cost of the production of silver — Canny provision in theBland Bill — Annual absorption of silver in the monetary system
128 APPENDIX.
of the United States of America—The asserted three distinct causes forthe decline of prices in Great Britain since 1873—Reasons for believing thatthe fall in prices is due to the fall in the gold price of silver—Gold as ameasure of value in Great Britain out of gear since 1873—High or lowprices a matter of indifference in current operations—The position of theagricultural and pastoral interests of Great Britain since 1873—The Indianwheat shipper's expectation on a rise in the Indian exchange with GreatBritain—The Manchester manufacturer's expectation on the fall of exchangebetween Great Britain and India—Until 1873 the debasing influence of thecheaper upon the dearer metal was masked by the action of bi-metallism incertain countries—Result of the United States opening their mints to theunlimited reception of silver at 16 parts of silver to 1 of gold—Result of theabrogation ofthe Bland Bill—The theory that in the event of a fall in the goldprice of silver, prices would rise in silver standard countries proved to bewrong—Reasons against this erroneous theory to be fount in the vastdifference between the monetary systems of India and Great Britain and theelemental might of weights of standard metals—American estimate of India'ssilver circulation— Comparative sensitiveness of monetary systems. — Twocurrents of counteracting tendencies in India—The appreciation of goldtheory as the cause of the decline in prices in Great Britain examined andrefuted—The diminished cost of production of commodities generally theory,as the cause of the decline in prices in Great Britain, examined andrefuted, to the extent of the decline in the gold price of silver—The position
of debtors—Instance of lamentable ignorance even among educated people ?n
official positions—Of 1,030,000,000 people composing the trading nations700,000,000 most freely exchange any of their surplus productions forsilver.
A List of John Henry Norman's Writings since 1883, page 152.
The Present Position of the Universal Currency Dilemma and theProbable Results of the Possible Future Action in connectionwith the same, by John Henry No'rman, read to the LondonChamber of Commerce, 18th January, 1888, the Right HonorableLord Bramwell in the chair, pages 153 to 176.
Figures extracted chiefly from Professor Dr. Soetbeer's " Materialen "
—
Opinion of the present Chancellor of the Exohequer, the Rt. Hon. Mr. Goschenon Bi-metallism in 1878 and 1887—Production of gold and silver in theU.S.A., 1883/6—China first figures as a precious met*l producing country in1883—Estimated production of gold and silver in the world during 403 years,
1482-1885—Proportionate weight of output of silver to gold between 1493and 1885 in eight periods—Future proportionate annual production of gold andsilver—Comparative average cost of the production of gold and silver
—
Mr. Stewart Pixley's statements—Professor Roberts-Austen's statement
—
Professor Egleston's opinion—The result of information furnished byAmericans,97 parts of silver to one part of gold—Advocates of local ducal standards
examined before the gold and silver commission of 1886-8, desire 15£ parts of
silvtr to 1 of gold, to be the universal relation to be fixed by consentient
legislation—Distribution of gold and silver—Messrs. Gibbs and Grenfell's
erroneous statements in their book on Bi-metallism—£16, 798,000 of £20,000,000of gold produced perannum required for other than currenc) purposes—Professor
Dr. Soetbeer's estimate of the gold reserves held by the Treasuries and Bank-ing institutions of 13 countries of the world during the years 1877 to 1885—TheBame authority's estimate of the monetary supply of gold and silver in
bullion and coin in 1885 in the chief countries of the world—Coinageduring 35 years ended in 1885 in Europe, United States of Americaand Australia—Gold and silver in the monetary system of the UnitedStates of America, 1873-1887—Doubts expressed whether the estimato is not
too high by £60,000,000 of gold—Foreign and colonial rates of exchange
—
APPENDIX. 129
18 different expressions •whereas one day there may be only 2
—
Under universal local dual standards the dearer currency might entirely dis-
appear within 40 years from every monetary system in the world—The world's
standard moneys of account—13 gold and 14 silver weights comprise the
whole—Information needed in English, such as two German books contain
—
Changes in the gold value of silver and the silver value of gold between 1872
and 1887—The world should think of rates of exchange and prices as definite
weights of standard metal—Ignorance of currency and the exchanges a disgrace
to civilization—Area and population of countries using the gold standard, the
silver standard, and the gold and silver standards prior to 1873—Five countries
using inconvertible paper currency. Are there 5 countries in the world whichhave satisfactory automatic metal standard currencies out of the 103 whichbase their prices on gold, silver, or both ?—The benoficent action of telegraphic
communication—Goods sold before purchased—Change in the relative value of
gold and silver has no effect to alter the relative quantities of commoditiesexchanged. "Working classes no real interest in Bi-metallism—Eevival of
local dual standards—If the British Isles become bi-metallic in their currency
the United States of America could discharge their cheap silver into them in
payment for such properties and securities as they might be pleased to take in
exchange—Danger to the United States of America in the rapid disoharge of
the debt of the country—Mr. Fairchild's statement of the monetary position of
the United States of America in July, 1886, compared with November, 1887
—His recommendation of terms upon which the Government purchase of silver
should cease—Redemption of the silver dollar will be demanded in gold
—
Silver dollar in 1887 75 cents against gold 100 cents—United States Debtcould be paid off in less than 10 years—Temptation to the United States of
America to re-habilitate silver—Vain attempt to regulate the comparativevalues of gold and silver—Silver at its natural exchange value—Enhancedpurchasing power of gold—Possibility of the United States of America to place
their monetary system upon the basis of a single gold standard.
Monetary Standards, Money, and Monetary Systems by John HenryNorman, Re-published from the Bankers' Magazine for August andOctober, 1888, pages 177 to 183.
An effective metal standard—Internal and international interchanges throughthe instrumentality of paper slips and leather strips only—Professor Huxleyand a scientific automatic metal standard for monetary purposes—Tentative
definition of the terms and conditions of a sound automatic metal standard
currency—A standard of value must have correlative value with that for whichit exchanges—Standard metal, whether as coin or bullion, can never commandan agio either in token coin or paper so long as the monetary system of acountry is sound, and there are no coinage charges on the standard metal
—
Peoples in oountries where monetary systems were worked till 1873 on the
local dual standard theory, are now living in a fool's monetary paradise—Thefinancial secretary to the U.S.A., Mr. Fairchild, and other able men in these
countries, are fully alive to this—The world-wide silver price of gold 44£per cent, more than it was before the mints of Europe and the U.S.A. wereclosed against the unlimited reception of silver from the public—Money—Theopinions of Professors H. Sidgwick, Dr. A. Soetbeer, F. A. Walker, and C.F. Bastable on money—Money and money tokens—Reasons why the definition
of money Bhould be confined to the standard substance—Monetary systems-Exhaustive investigation should be made into the, I. elemental might of
weights of standard metals—II., Fresh rules (if such can be found) for
the quantity theory of the standard— ITI. Fresh rules in oonnectionwith the value theory of the standard— IV., Comparisons of themonetary systems of the world — The probable unprepared state
of the world to undertake the investigation, especially in the fourth particular.
—Information needed.—Hindrances met with in seeking this information
9
130 APPENDIX.
during the past 13 years, from Government and others.—Astounding opinion
that gold and silver are only small change.—The second hlue book issued by the
Gold and Silver Commission a complete failure to elevate credit instruments to
the same platform as standard metals.—Surprise at the appearance of Mr.Dunning Macleod's views of wealth appearing in the report.—The base of the
present dilemma rests upon the value theory.—Impolicy of attempting to
remove silver from one of the two monetary standards of the world.
American Opinion op Bi-Metallism and its Advocates. Extract froman Essat on Finance, by Posey S. Wilson, Esa. (Mem. Assoc. Econ.Soc), Published in Rhodes Banking Journal, in July, 1888, pages184 to 186.
A medium for exchange of materials, services, and rights, a matterof self-evident necessity. To avoid confusion, term dollar has beenfound and a concrete substance in 23"22 grains of fine gold appointed
to correspond thereto. John Law admitted, "It is not the sound of the de-
nomination, but the value of the metal which is to be considered." Mis-guided and designing men have sought in vain to prove that 23*22 grains of
fine gold and 371£ grains of fine silver are exactly equivalent, " if all wouldadmit it." The double standard argument, the proof that one is equal to
two. The clamour for the free coinage of silver in the United States of
America merely a conspiracy on the part of mine-owners to keep silver, in
spite of natural laws, at an arbitrary figure already set by themselves. Soonthey will insist that gold and silver be made equal, ounce for ounce.
" Norman's Exchange Calculus," or " Single Grain System," pages186 to 191.
Specimen of information which should be furnished annually by each countryof the world to its people.—Gross and fine weights in grains of the chief goldand silver coins in the world, with the denominational expression for one grainof fine metal attached.—The value of the coins at 42 pence per ounce of silver.
—A table of constants furnished by Mr. Alex. L. Glencross, being the value of
each silver coin at ^th of a penny, per 444 grains of fine silver, or one Britishstandard ounce.—Two columns should be added to complete the calculus.
Table No. I.
Gross and fine weights in grammes and grains of the moneys of account,and the chief gold and silver coins in current use in the world.—Thedenominational expression for one grain of metal.—The proportion of silver
to gold in the coinage.—The value of moneys of account in the proportionof 22*45 parts of silver to 1 of gold, in Great Britain, France, Germany,and the United States.
Tables No. II.
Tables showing the par values in Great Britain of the world's silver moneysof account, and the par values in India of the world's gold moneys of account,at proportions ranging from 16£ parts of silver to 1 part of gold, to 100 partsof silver to 1 part of gold on " Norman's single grain system," with reasonsfor making the variation of silver to gold from 15£ to 95 of silver to 1 ofgold.
Table No. in.
The denominational expressions for equivalent weights of fine gold in 47countries of the world, by Mr. Alex. L. Glencross.
. October 20th, 1888.
APPENDIX. 131
TO THE GENERAL READER.
,
The following extract from Mr. William Horsley's introduction
to the " Universal Merchant," written a.d. 1753, would appear as
valuable and useful now, in this country and the world, as when it
first appeared :
—
" The acquaintance with the exchanges, however it may seem
to some the business of merchants only, in commercial free
States, falls properly under the cognizance of gentlemen, particu-
larly those who have or intend having any share in the Legis-
lature, and still more materially such who are in the immediate
direction of public affairs, as without a masterly skill in bullion
and coin it is impossible to understand exchanges, whence singular
inconveniences may happen in delicate emergencies. There is not
any article of trade in which the gentleman should not be a
tolerable theorist, for many obvious reasons ; but in bullion and
coins, whereby other articles are usually adjusted, he should be
practically skilful."
Every individual from the youngest to the oldest in each
community of the world is interested with or without his
knowledge, in the possession and preservation of a sound
monetary system. It must supersede barter and become the
instrument, under its operative term price, for the internal andinternational exchanges of services, properties, and commodities of
every country. It is the duty and privilege of each, according to
his or her ability, to aid in the acquirement of this knowledge bysubmitting their views to be threshed out by the world, that so
perhaps little by little, monetary science may rest upon a solid basis
of truth which no reasoning mind can consistently question or
resist. It is not a subject for princes,* rulers, statesmen, legislators
* In Sir Thomas Howe's famous speech on Money at the Council Table in1640 he mentions the saying of Theodoret the Goth, alluding to the effiges
upon coins, " Princes must not suffer their faces to warrant falsehood."
132 APPENDIX.
political economists, merchants and bankers only, but for all who
are determined to understand the principles of the money they
daily use.
It is not to be expected that every fairly-educated child and
grown-up person who may peruse this pamphlet should, through
its means, at once become a master of currency and the exchanges.
The deficient education of past ages is not to be remedied quite so
easily. Besides the inaptitude of many minds for figures, there is
the reputed difficulty of the subject in hand to deter those who
take pleasure in figures from attempting to master it. The former
will say, "What is the use of all this botheration with decimals,
long calculations and minutiae of grains of fine metal ? If I am
going into a country, or going to do business with a country, I
learn all that is necessary about its coinage and exchanges in a
short way. I do not want to be bothered with all this stuff." The
latter will say, " I do not want to run the chance of swelling the
number in our lunatic asylums, therefore I shall keep clear of the
subjects." It is well that both classes should know that if they
would entertain reasonable opinions upon mono-metallism, bi-
metallism, tri-metallism, alternative-metallism and no-metallism,
they must understand the foundation of metallism.
The " single grain system," t herein made plain to the compre-
hension of children, effectually accomplishes this. The foundation
thus exposed is not so difficult to master as the multiplication table
and could be taught with advantage and interest in connection
with geography in the schools of the world. The fundamental
difference between value and price is quite within the power of
children to grasp. It is easy to demonstrate that in all countries
He remarks "What renown is left to the posterity of Edward the 1st in
amending the standard, both in purity and weight, from that of the older andbarbarous times ; it must needs stick as a blemish upon princes that do the
contrary." Also "Queen Elizabeth in her edict telleth her people, that she
had conquered now that monster that had so long devoured them," meaningthe variation of the standard. Baron Cotton quoting this in 1626 added " and
so long as that staid adviser lived she never (though often by Projectors im-
portuned) could be drawn to any shift or change in the rate of her moneys."* It is to be hoped we shall soon have heard the last of Sydney Smith's
opinion that the subjects of currency and the exchanges, next to love and
religion, fill our lunatic asylums.
t It will be seen in the appendix that three leading German political
economists, Professors Soetbeer, Lexis and Nasse, express their pleasure with
Mr. Norman's system as a great simplification of the whole exchange
calculus.
APPENDIX. 133
which possess effective metal standards, prices and rates of exchange
are absolutely definite weights of standard metal. This knowledge
is also easy to acquire and retain, and the necessary conditions of
a metallic standard are quite as easy to understand.
It is very probable that the value of the new Exchange
Calculus would have remained generally unrecognised for a long
time to come, but for the exceedingly able manner in which Miss
Sharland has elucidated it under the terms " single grain system,"
to the understanding of children, and the evidence that young
persons have given that they can assimilate and reproduce her
work. The following letter from Mr. H. J. Chaney, the keeper of
the British standards, furnishes high testimony to the excellent
work accomplished by Miss Sharland.
"August 27th, 1888.
" I beg to return by separate post the copies of the Co-opera-
tive News which you were so good as to leave with me. Theanswers given by the children to the questions on money are
really surprising, for they evince powers of mind and application
which could hardly be expected in children so young. The success
has evidently had its origin in the able chapters on money which
Miss Sharland had prepared for the children. In these chapters
the actual relation between the standard of monetary measure in
one or different countries is based on the simple unit of a grain of
the standard substance, and so all the technical overloading always
met with in the literature of this subject is quite swept away. Thechild has only a simple factor before him, and by successive gentle
steps he has been taught to apply that factor to unravelling so manyknotty problems in exchange and value. It has given me very
great pleasure to read the papers which you have sent me, and I
shall be glad at any time to receive further information on this
important and interesting question of monetary values."
Though this Calculus may become of universal use, as an
educational instrument ; and of great value to the traveller, merchant,
soldier and sailor, * it is not to be expected that there will be any altera -
* Certain benefit would oftentimes result to these classes from readily andeasily ascertaining the par value of all moneys of account and gold and silvercoins anywhere, whatever the gold price of silver or the silver price of goldmight be. In Dr. Patrick Kelly's "Universal Cambist," published in 1811,it is stated that under regulation in Barbadoes a tenderer of light gold coins
134 APPENDIX.
tion in the present method of working or quoting the exchanges
between the countries of the world, on the denominational expressions
for weights of gold and silver. It may be true that if ingenuity had
been set to work to devise a perplexing, baffling method of quota-
tions of exchanges it could not have better succeeded than in the
production of the present system. Now, however, any one desirous
to know the weight of fine metals indicated by the quotations of
exchange between countries possessing effective metal standards
to be met with in the daily papers can easily ascertain them.
In Mr. Alex. L. Glencross's table which is attached, and the
column of Constants which is added at his suggestion, to the
exchange Calculus, there is gratifying evidence that the subject
is one of growing interest.
It is well that possibilities should be faced, and for that purpose
only, are the gold prices of silver coins and the silver prices of gold
coins at proportions of silver to 1 of gold ranging from 15£ to
100 given in the Table II attached.
The concrete case of interchanges between Great Britain and
India of Manchester piece goods for Indian wheat at altered rates
of exchange, or the lower gold price of silver and the higher silver
price of gold, given in the memorandum prepared for the Gold and
Silver Commission, should be carefully studied and thoroughly
understood. This demonstrates the " elemental might " of weights
of standard substances, and the fundamental difference between
was compelled to receive 2|d. per grain less for each grain short of the properweight of the coin. The denominational expression for one grain of standardgold which contains fVth part of copper is 1*947 pence. Comparing this with2*75 pence, the difference is 41 per cent, upon the lower quotation. If thepence in Barbadoes were such as the pence now used here, i.e., the 1 240th partof a pound, dealing in light gold coins was possibly a very profitable businessthere in those days. The same author mentions the high opinion Sir JohnSinclair had of Kruse's Hambro Contorist, and that he recommended its
translation, Sir John adding: ''Till then we principally rely upon foreignmerchants, who make fortunes from our ignorance of the nature of theexchanges." This book is in the British Museum, but there is no Englishtranslation of it. Thomas Hatton in his essay on gold coins publishedin 1774 mentions that the general value of gold is at the rate of twopence pergrain. The eminent numismatist Thomas Snelling in his most valuable essayon gold coins in 1766 gives the denominational expressions for weights ofBritish standard gold, ranging from one quarter of a grain to one poundtroy. The denominational expression for one grain of fine gold in the BritishIsles has been, and always will be, within a minute fraction of 2*124 pence,so long as the sovereign is divided into 240 pence and there are 113-0016 grainsof fine gold in it on its issue from the mint.
APPENDIX. 135
the interchange of commodities by barter and their interchange
through the instrumentality of price, in so far as the weights of
standard substances may be altered by causes which operate alone
upon those substances and which do not alter the quantities of
commodities interchanged, in this case wheat and piece goods.
Besides the subjects mentioned, the following pages contain,
(1) A definition of money. (2) The terms and conditions of a
scientific, automatic metal standard for currency purposes.
(3) Remarks upon the importance of a thorough comprehension
of the different monetary systems of the world. (4) Weighty and
unanswered arguments agains tlocal dual standards or bi-metallism.
(5) An American view of bi-metallism and its advocates.
Upon monetary subjects there is a very large admixture of
error to be found in legislative enactments, state documents,
the evidence and report of commissions, the 2,000 and more
books and pamphlets and the utterances of statesmen, legis-
lators, political economists and others throughout the world.
The objects of this pamphlet are, to bring the foundation of
money within the comprehension of all, to promote the teaching
of the subject with geography in the schools of the world; to
stimulate the study of it, and to assist those whose desire it is to
discriminate between truth and error in the past and current
literature of the subjects.
Every student of money should read Locke " On the raising
of coins." It might be well asked, what are the differences be-
tween the raising of coins, bi-metallism, and the excessive issue of
inconvertible paper, in their respective effects on prices, the
morality of such procedures, and the adequacy of the measures
to accomplish the object in view ?*
It may shortly be more generally recognised than it is at present
,
that without a thorough understanding of the exchanges of gold,
silver and inconvertible paper, it is impossible to form sound views
upon Monetary Science, much less to become a master of it.
22, Lee Tebrace, London, S.E.
October 4th, 1888.
* For an essay in reply to this question, besides Locke " On the Raising of
Coins," resort might be had to Messrs. Cernuschi, Gibbs & Grenfell's writingson bi-metallism, and to F. A. Walker's " Money, and the History of the States
of North America on the excessive issues of inconvertible paper."
136 APPENDIX
AN ANTIDOTE TO BI-METALLISM;OR, LOCAL DUAL
STANDARDS; WRITTEN IN 1882.
I.
—
Definition of Bi-metallism: and Mono-metallism.
1. Bi-metallism—What it is.—The reception from and the
coinage for the public under national law by the mints of the
nation of any quantities of both gold and silver, and returning the
same to the public at a fixed proportion of one to the other, the
general approval being in the proportion of one part of pure gold
to fifteen and half parts of pure silver ; also the national appoint-
ment that both shall be legal tender to unlimited extent.
2. Mono-metallism—What it is.—The reception from and the
coinage for the public under national law of either gold or silver
(but not both), and returning the same to the public ; also the
national appointment that one metal only shall be legal tender to
unlimited extent.
3. Experience of the markets of the world has shown that the
variation between gold and silver has ranged between one part of
pure gold to ten parts of pure silver, and one part of pure gold to
twenty-two and half parts of pure silver.
II.
—
The Exchange value of Gold and Silver Governed
by their Cost Value.
4. The precious metals, as currency, subject to the same laws
of value as other substances and dependent upon cost of production
—proved from the writings of Ricardo and J. S. Mill. The follow-
ing quotations are from
—
Ricardo—On the rent of Mines.—"It will be sufficient to
remark that the same rule which regulates the value of raw
produce and manufactured commodities is applicable also to the
metals, their value depending not on the rate of profits, nor on
APPENDIX. 137
the rate of wages, nor on the rent paid, but on the total quantity
of labour necessary to obtain the metal and to bring it to market.
It has, therefore, been justly observed, that however honestly the
coin of a country may conform to its standard, money made of
gold and silver is still liable to fluctuations in value, not only to
accidental and temporary, but to permanent and natural, variations
in the same manner as other commodities."
On Foreign Trade.—"Any improvement in the facility of
working the mines by which the precious metals may be produced
with a less quantity of labour will sink the value of money
generally. The nations of the world must have been early con-
vinced that there was no standard of value in nature to which they
might unerringly refer, and therefore chose a medium which, on
the whole, appeared to them less variable than any other
commodity."
On Currency Banks.—" Gold and silver, like all other commodities,
are valuable only in proportion to the quantity of labour necessary
to produce them and bring them to market. Gold is about
fifteen times dearer than silver, not because there is a greater
demand for it, nor because the supply of silver is fifteen times
greater than that of gold, but solely because fifteen times the
quantity of labour is necessary to procure a given quantity
of it."
On the influence of demand and supply upon prices.—" It is
cost of production which must ultimately regulate the price of
commodities, and not, as has been said, the proportion between the
supply and the demand. The proportion between the supply and
the demand may, indeed, for a time affect the market value of a
commodity until it is supplied in greater or less abundance accord-
ing as the demand may have increased or diminished, but this
effect will be only of temporary duration."
On the high price of Bullion.—" Gold and silver, like commodi-
ties, have an intrinsic value which is not arbitrary, but is
dependent on their scarcity, the quantity of labour bestowed in
procuring them, and the value of the capital in the mines which
produce them. If the quantity of gold and silver in the world
employed as money were exceedingly small or abundantly great it
would not in the least affect the proportions in which they wouldbe divided among the different nations. The variation in their
quantity would have produced no other effect than to make the
138 APPENDIX.
commodities for which they exchanged comparatively dear or
cheap. The smaller quantity of money would perform the functions
of a circulating medium as well as the larger. However exact
the conductors of the mint may be in proportioning the value
of gold to silver in the coins, at the time when they fix the ratio,
they cannot prevent one of these metals from rising while the other
remains . stationary or falls in value. Whenever this happens,
one of the coins will be sold for the other. Mr. Locke, Lord Liver-
pool, and many other writers have ably considered this subject,
and have all agreed that the only remedy for the evils in the
currency proceeding from this source is to make one of the metals
only the standard measure of value. Mr. Locke considered silver
as the most proper metal for this purpose, and proposed that gold
coins should be left to find their own value and pass for a greater
or less number of shillings as the market price of gold might vary
with respect to silver ; Lord Liverpool, on the contrary, maintained
that gold was not only the most proper metal for the general
measure of value in this country, but that by the common consent
of the people it has become so, was so considered by foreigners,
and that it was best suited to the increased commerce and wealth
of England."
J. S. Mill—On the value of money as dependent upon the cost of
production.—''But money, no more than commodities in general,
has its value definitely determined by demand and supply. The
ultimate regulator of its value is cost of production. It is
evident, however, that the cost of production, in the long run,
regulates the quantity; and that every country (temporary
fluctuations excepted) will possess, and have in circulation, just
that quantity of money which will perform all the changes
required of it consistently with maintaining a value conformable
to its cost of production."
Of money considered as an imported commodity.—"In so far as
the precious metals are imported in the ordinary way of commerce,
their value must depend on the same causes and conform to the
same laws as the value of any other foreign production. Money,
then, like commodities in general, having a value dependent on,
and proportional to, its cost and production, the theory of money
is, by the admission of this principle, stripped of a great deal of
the mystery which apparently surrounded it."
5. The conclusions of these writers have never been con-
APPENDIX. 139
troverted, nor the soundness of their theory, that the value of
the precious metals is dependent on the cost of the production of
them.
6. It would appear, therefore, to follow that, in the main, the
historical fluctuations of the market value of the metals gold and
silver, in the proportion one has borne to the other, is the measure
of the variation of the comparative cost of the production of each,
and confirms, with regard to these two substances, a theorem
which universal experience commends, viz., that no twoDIFFERENT SUBSTANCES CAN BE PRODUCED FOR ANY LENGTH OF
TIME ON PARALLEL LINES OF COST.
7. If this theorem be true with regard to the cost of the precious
metals, bi-metallism is an unnatural and unscientific system which
cannot possibly be established.
8. The unsoundness of the bi-metallic system is evidenced by
the admission of its advocates that it cannot be adopted unless it
becomes universal ; but would the metal-producing countries, such
as Australia, consent to it ?
9. Bi-metallists must prove that the cost of production has no
effect upon the value of the precious metals as circulating media,
and those among them who say that it costs as much to produce an
ounce of silver as it does to produce an ounce of gold, appear the
most consistent, however erroneous they may be.
10. The more simple the laws affecting the currency, and the
more the ebb and flow of the standard metal is left to automatic
action, the better for the internal and foreign trade of that
country.
1 1
.
To make a law which would act against nature cannot be
the desire of bi-metallists, and could never accomplish the object for
which it was intended.
12. If all the nations using metallic currency embraced bi-
metallism at once, the proportion in the currency being fixed at one
part of pure gold to fifteen and a half parts pure silver, there wouldcommence an immediate debasement of the coinage of this country
;
and in process of time a higher range of prices from such action
would ensue, which would be injurious to fundholders and persons
enjoying fixed sterling annuities or incomes, from whom, as well as
from others, a complaint would proceed that they were being
impoverished by law.
13. Even by legalising bi-metallism it would not follow that
140 APPENDIX.
contracts would invariably be made on either gold or silver, one
metal only might be specified.
14. Under an universal bi-metallic system what would be the
relative quantities of production, and what the ratio of cost of
production of gold and silver, at which the production of one of the
metals for currency would cease ? Would excessive quantities of
gold, in the ratio of one part of pure gold to ten parts of pure
silver, cause the production of silver to cease, or would excessive
quantities of silver, in the ratio of one part of pure gold to twenty
parts of pure silver, cause the production of gold to cease ?
15. Bi-metallism would impose a tax on the general public in
the nature of a monopoly of a most unjust kind, whereby the
producer of the cheaper metal of the two on the established ratio
would command the same value as the producer of the dearer
metal.
16. The invariableness of a measure of value under the mono-
metallic system is great, productive of loss and constant injury
:
the variableness under the bi-metallic system must prove eventually
considerably greater.*
* This paper was read to the late Professor Stanley Jevons hefore it wasprinted in 1882, and was approved by him. The following is an extract on it,
from a note received from the late Professor Bonamy Price in November,1882. " Thanks, so many, for the paper you have sent me. It is excellent. I
wish it was hung up in the study of every bi-metallist in Europe : it
could not but do him endless good. The quotations are admirable."
APPENDIX. 141
MEMORANDUM on the cause or causes of: 1st. The world-wide
fall in the gold price of silver and the rise in the silver price of
gold. 2nd. The fall in the prices of commodities generally in
Great Britain since 1873, by John Henry Norman, November,
1887,for the gold and silver commission.
3. I am convinced that the sole cause of the world-wide fall in
the gold price of silver, amounting now to 25*57 per cent.,* and
the rise in the silver price of gold, amounting now to 33'93 per
cent., is the closure of the mints of the countries forming the Latin
Union and the United States of America against the unlimited
reception of silver from the public.
2. I am equally convinced that the chief cause of the fall in
prices generally in Great Britain since 1873 is distinctly traceable
to the fall in the gold price of silver.
3. Before advancing reasons for these opinions I would advert
to a prominent and very important statement made by Professor
A. Soetbeer in his excellent publication " Materialen," to the
effect that the " elemental might" of weights of standard metals
is seen in the rates of exchange and in the actual transmission of
standard metal in satisfaction of international balances.! This so
* The average price of silver in London for the year 1873 was 59| penceper ounce, and it is now 44 pence per ounce.
t The following are the per-centage total imports and exports of gold andsilver upon the total import and export trade of Great Britain in commodities,on figures furnished hy the Board of Trade. Averages of periods of five yearsended in 1863, 14-4
; 1868, 9- ; 1873, 9-1; 1878, 9-9
; 1884, 5-9. The averageyearly movements during these periods have ranged from £41,299,000 in theperiod ended in 1884 to £63,323,000 in the period ended in 1878. During theeight years ended in 1886 there has been an excess export over import of goldof £11,318,000, against an excess import over export of gold of £75,249,000during the previous 20 years. In the 28 years the excess import has been£63,931,000. Taking the annual requirements of Great Britain for other thancurrency purposes at £2,500,000, it would amount to £70,000,000 in the28 years.
142 APPENDIX.
entirely supports the view which I have long taken ofthe standard
substance for currency purposes that I do not hesitate to makethis statement, that wherever there is a monetary system which
is based upon an effective metal standard* there prices and rates of
exchange are denominational expressions of definite weights of
standard metals, and that these weights as weights alone con-
stitute prices and rates of exchange, and are ordinarily the true
measures of value and at all times the means of payment, All
instruments of credit, including legal tender banknotes, are moneytokens, and but signs of the standard substance which alone is true
money.
4. To illustrate the elemental might of weights of standard
metals, the working of exchanges of commodities through the
instrumentality of price, and by means of barter, I present a con-
crete case of exchange between England and India of Manchester
shirtings for wheat. I assume that prices for commodities have
fallen in Great Britain, and that they have remained stationary in
India, that the transport and all other charges are the same nowas they were in 1873, but that the exchange in 1873 on India
was 22-65 pence per rupee, and that it is now 16-75 pence per
rupee, f This fall in exchange is 26 per cent. Under the fall
* I mean by an effective metal standard that all money tokens are readilyconvertible into the standard. I ventured to define the terms and conditionsof a sound automatic standard currency. It is briefly this : The substanceselected for the standard muse be received in unlimited quantities, andcoined and certified by the State, be appointed unlimited legal tender, and bepreserved in an effective state. At a meeting of the London Chamber ofCommerce, held on the 18th January last, at -which I read a paper upon "Thepresent position of the world-wide currency dilemma, &c," Lord Bramwellwho was in the chair, approved of this definition.
t In 1873.
3,000 pieces of Manchester shirtings at
7s. H|d., or 44-8475 grains of fine gold,per piece, with freight to India
Insurance on £1,200
Exchange at 22-65 pence per rupee, or 10-664 grains of fine gold per 165grains of fine silver. 135,051 grains of fine gold divided by 10-664 grains offine gold gives 12,663-26, which is the number of rupees. These, multipliedby 165, give 2,089,438 grains of fine silver.
£ s.
Grains ofFine Gold.
d.
1,1904
12
10
6 or 134,542-5
„ 508-5
1,195 2 6 „ 135,051-0
APPENDIX. 143
of exchange, before experience taught what the result would be,
it was the wheat exporter's expectation that the rise in exchange
would ensure him a profit upon his wheat shipment to Great
Britain equal to the difference in the rise in the exchange ; and
the Manchester manufacturer uttered loud lamentations that the
fall in exchange with India would cut him off from supplying
the Indians with piece goods. In these two instances, of inter-
state of these Shirtings at Kurrachee.
Es. 8
Grains ofFine Silver.
3,000 pieces at 4 rs. 3 ann. 7 pies, or
696-479 grains of fine silver, per piece
net price, less freight and all Indiancharges 12,663 4 9 or 2,089,438
Say that this silver is invested in wheat for Great Britain
:
784-627 quarters wheat at 14 rs. 4 ann. 10 pies, or
2,359-725 grains of fine silver, per quarter, free onhoard 1,851,504
Freight to Great Britain, per quarter 3s. 7d. = 20-246
grains of gold, or 313-246 grains of silver 237,934
2,089,438
The rate of exchange being 22-65 pence per rupee, or 10-664 grains of fine
gold, for 165 grains of fine silver. 2,089,438, being divided by 165, gives12,663-26 rupees, and these, divided by 10-664, gives £1,195 2s. 6d.
Sale of Wheat Free of all Charges over the Ship's side in Great Britain.
Grains ofFine Gold.
£ s. d.
784-627 quarters at £1 10s. 5|d., or172-108 grains of fine gold per quarter 1,195 2 or 135,051
In this instance of exchange it is seen that 3,000 pieces of shirtings,costing 135,051 grains of fine gold, sold in India for 2,089,438 grains offine silver, which, invested in wheat, &c, produced 784-627 quarters, whichBold in the United Kingdom for 135,051 grains of fine gold. The rate ofexchange for converting the gold into silver and the silver into gold beingboth the same, 22-65 pence per rupee, and one rupee for 22-65 pence.
In 1887.Grains ofFine Gold.
3,000 pieces of shirtings at 5s. 10|d., or33-198 grains of fine gold per piece, withfreight, &c, to India 881 5 or 99,596-97
Insurance 2 18 10 ',, 332-88
£884 3 10 „ 99,929-85
Exchange at 16*75 pence per rupee, or 7-886 grains of gold for 165 grains
144 APPENDIX.
changes of commodities in 1873 and 1887, which I have given at
foot, we have powerfully illustrated, 1st. "The elemental might "
of weights of standard metals, which is shown hy the forced fall
in the prices of piece goods and wheat in a gold standard country,
to meet the fall in the gold price of silver. 2nd. The conditions
of value. The same length of piece goods and the same weight of
wheat of equivalent quality were exchanged in both cases, because
these quantities depend upon the expenditure of value giving
factors which might have retained the same relation in both instances.
3rd. The conditions of price. In the one case 135,051 grains of
fine gold had to be given for 3,000 pieces of shirtings, and 784*627
quarters of wheat realised 135,051 grains of fine gold. In the
other, 99,929-85 grains of fine gold had only to be given for
3,000 pieces of shirtings, and 784*627 quarters of wheat sold for
99,929*85 grains of fine gold. These changes in the gold standard
country are accounted for by the measurable fall in the gold price
of silver. In the silver standard country during the two periods
2,089,438 grains of silver made up the prices of the piece goods
and the wheat respectively. The pressure for the adjustment of
prices of goods whether in gold standard countries from silver
standard countries, or in silver standard countries from gold
standard countries necessary upon the fall in the gold price of
silver and the rise in the silver price of gold found expression in
the fall in gold prices of piece goods and wheat to meet the
equivalent decline in the gold price of silver.
5. My reasons for asserting that the fall in the gold price of
of silver. Divide 99,929*85 by 7*886, and the result is 12,663*26 rupees
;
this, multiplied by 165, gives 2,089,438 grains of silver.
It is unnecessary to repeat the sale of the shirtings and purchase of whealin India, the figures being the same as in 1873.
Sale of Wheat in Great Britain.Grains ofGold.
£ *. d.
. 784*627 quarters, over the ship's side, at
£1 2s. 6|d., or 127*359 grains of gold,
per quarter .. 884 3 10 or 99,929*85
In this instance it is seen that 3,000 pieces of shirtings costing 99,929*85
grains of gold, sold in India for 2,089,438 grains of silver, and that
784*627 quarters of wheat, in which the proceeds were invested, sold in
Great Britain for 99,929*85 grains of gold. The rate of exchange for con-
verting the gold into silver and the silver into gold being both the same,
say, 16*75 pence per rupee.
APPENDIX. 145
silver is due to the closure of certain mints against the unlimited
reception of it from the public, are
:
The certainty that if one country such as the United States of
America—not Jersey—opened its mints to-morrow to the unlimited
reception of silver from the public at the relation of 1 6 parts of
silver to one of gold, exchange with India would immediately
return to the rates prevailing between gold standard countries and
that country before 1873.
The certainty that if the Bland Bill should be abrogated, the
gold price of silver would at once further fall, possibly considerably
below 30 pence per ounce in London.
The present comparative average cost of the production of gold
and silver, so far as can be ascertained from American state printed
documents, and testified to by the President of the Colorado Silver
Alliance, with regard to silver in Colorado, and with reference to
gold by the Mears' Chlorination Company of the United States of
America for the whole world, is nearer 100 parts of silver to one
part of gold ; in which opinion a leading American expert
concurs.
The evidence given by Professor Roberts-Austin before the
Royal Commission last year that the average cost of producing
silver measured by gold is 44 parts of silver to one part of gold.
The absence of evidence that this sudden cheapening of the cost of
the production of silver commenced in 1873. But there is evidence
in the enormous wealth of the silver kings, and the anxious desire
which existed in certain quarters long previous to 1873 to makeGreat Britain one of the dumping grounds of cheap silver, that the
present proportion of 21*4 to 1 is vastly different from the true
proportion.
The high probability that some silver Trust has been manipula-
ting the British silver market ever since the Bland Bill contained
the canny provision that the United States of America mints must
buy $2,000,000 and not more than $4,000,000 of silver per monthon the London market price of the day*
6. There may be many causes for the decline of prices generally
* Though the United States of America took into their currency £8,353,000of silver last year against an average during the preceding five years of
£5,621,000 ; the average price of silver was never lower than last year, andso far vastly lower prices do not appear to diminish the production of thearticle.
10
146 APPENDIX.
in Great Britain since 1873. Three among them which are on the
surface have been much examined ; and each has its advocates of
ability and experience in monetary matters. The three are : 1st.
The appreciation of gold, as caused by a diminished supply of that
metal for currency purposes, together with a fresh distribution of
it as between different countries using it for currency purposes.
2nd. A diminution of the cost value or over-production of com-
modities generally. The meaning of this is : That there has been
a diminution of expenditure of value-giving factors such as labour,
rent for land, or shelter, machinery, the use of capital and all other
factors that give value, on the production of commodities. Or that
commodities generally are being sold at an exchange value below
their cost value. 3rd. That the fall in the gold price of silver has
been the chief cause of the decline in prices generally in Great
Britain since 1873.
After advancing reasons for holding the opinion that the fall in
the gold price of silver is the prime factor and measurer of a large
portion of the decline in prices in Great Britain, notice will be
taken of the two other alleged causes.
7. Gold as a measure of value in Great Britain has since 1873
been completely thrown out of gear. Price, or a definite weight of
gold, should be a measure of the cost and sale values of commodities
within a narrow margin of fluctuation in ordinary times.* It was
not so in the period of vast additions to the gold currencies of the
world nor in previous periods of history when the standard was
mostly silver, and vast additions of that metal were made to the
currencies of the world. These were catastrophic periods to all
States and peoples interested in deferred payments, but a matter of
little moment to the working classes and all interested in current
interchanges connected with industrial life. For if a high price
was obtained a high price had to be paid. If a low price was
obtained a low price had to be paid.f It did not affect to diminish
* This narrow margin results from the vast mass of metals as currency tobe acted upon under the ordinary laws of supply and demand. The presentdislocation between gold and silver is the result of the break-down of unwiselegislation which assumed to control economic forces.
t If prices generally in Great Britain fall equally and at the same timewith the fall in the gold price of silver—see Economist diagram of the prices
of silver and commodities generally in the first report of the present Gold andSilver Commission— it is difficult to perceive how the current agricultural andpastoral interests are worse off than before the dislocation, provided there hasbeen an equivalent fall in rent.
APPENDIX. 147
or increase quantities or lengths of commodities for quantities
or lengths of commodities. Such is the position of this
country's measure of value now in an inverse sense, and
brought about by an entirely different cause. All the time
that there has been an unnatural alliance between gold and
silver produced by the legislation iu a group of countries, that
15 J parts of silver shall be equal to one part of gold, and in
another country that 16 parts of silver shall be equal to one part
of gold, and the pressure of the cheaper metal at those relations did
not overbear the law and destroy the action, the debasing influence
of cheaper upon the dearer metal was masked. At the same time
prices in the western world were based upon the joint action of
both gold and silver. In the instance of exchange of piece goods
for wheat we saw that the shipper of wheat expected that from
the decline in the exchange he would be able to reap the benefit of
that decline in securing the same or the approximate price for it in
Great Britain as before the decline. He found that he got no
more than his ordinary profit. The Manchester merchant, arguing
upon the theory which he had been taught, that in the event of a
decline in the gold price of silver there would be a corresponding
rise in the silver price of commodities in silver standard countries,
finding no rise in the value of his piece goods in India, in the
midst of his lamentations discovered the gold price of his piece
goods in Manchester declining to an adjustment with the stationary
price in India, and his business proceed as before. These adjust-
ments are due to the elemental might of weights of standard metals.
Assume that the United States of America open their mints to the
unlimited reception of silver in the proportion of 16 parts of silver
to one part of gold. The London remitting rate on India would at
once become approximately Is. lid. per rupee. On this the
pressure for the re-adjustment of prices of a very large number of
articles—all those from silver standard countries—would im-
mediately commence. This pressure might result in a return, in
large measure, to the prices of 1873 in this country. This might
be the pressure in one direction. But for the past six years it has
been the general impression in London, that on the abrogation of
the Bland Bill, silver would decline to 30 pence per ounce or
31-43 parts of silver to one of gold. It is most probable that the
fall in price would be much more. Assume, however, that this
last buttress of silver, the Bland Bill, goes, and the gold price of
148 APPENDIX.
that metal becomes 30 pence per ounce. This means another fall
in the gold value of silver of 32*66 per cent. It may be a matter
of opinion how the pressure for the adjustment of prices would
operate, whether by a further fall in gold prices generally or a rise
in silver prices in silver standard countries, but that an adjustment
would take place cannot be doubted if the experience of the past
is to be our guide.
We have theorised that in the event of a decline in the gold
price of silver, prices of commodities generally would experience a
corresponding rise in silver standard countries. This theory maybe false. Our fathers and grandfathers lived in the gold and silver
fixed relation period, and their theories are based upon their sur-
roundings. Their forefathers knew next to nothing about the
subject. We are witnessing the tremendous might of gold and
silver under a less constrained legislative relationship than existed
14 years ago, and we may possibly have to abandon some monetary
theories and modify others.
The difference between the positions of gold standard countries
such as Great Britain and silver standard countries is enormous.
A gold standard country wherein barter has ceased to be practised,
the monetary system of the first order affecting each unit of the
whole population, wherein the quantity of the standard metal is
sought to be maintained at a tolerably uniform level such as Great
Britain possesses, cannot be compared with a silver standard
country wherein barter most extensively prevails, where the
monetary system, though of first class automatic order, affects
only a minimum of the population, where the quantity of the
standard metal as currency fluctuates with prosperous and unpros-
perous seasons, owing to the customs of the people and not to the
condition of its external trade, such as India.* Would it not be
unnatural to suppose that changes in currency matters would be
equally rapid in two such countries ?
* It is stated in " Tooke on Prices " that before the middle of this century it
was estimated that India had absorbed £400,000,000 of silver, and that the
loss by abrasion, &c, on this equalled £4,000,000 per annum. At the sametime the French loss by abrasion on their silver circulation -was estimated at
£1,000,000 per annum. Baboo Tin Coorey Doss, of Calcutta, who in the mainhas written very sensiblv upon the present currency dilemma, estimates the
silver circulation of India at £76,000,000. Official documents of the UnitedStates of America place the circulation of that country at 1200,000,000, but
this is a calm doubling of the information received from their representative
in Calcutta,
APPENDIX. 149
Surely the sensitiveness of the gold standard country must he
vastly greater than that of such a silver standard country.*' It
would certainly appear to he a sounder theory, that given a fall in
the gold price of silver in such a country, gold prices generally
should fall there rather than silver prices should rise in such a
silver standard country.
8. With regard to the first cause assigned for the fall in prices
generally in Great Britain since 1873. If the theory is sound and
applicable to the whole world*! that owing to diminished supply and
fresh distribution of gold for currency purposes, an appreciation
of this metal has taken place, and that in consequence gold prices
generally have fallen 30 per cent., then the purchasing power of
gold instead of being as it was in 1873, £700,000,000, is now for
the whole world £910,000,000. It might be asked whether this
increase of purchasing power is only commensurate with the in-
crease of interchanges. If it is more it should have the effect of
raising prices. But as we have traced a decline of 26 per cent, to
the dislocation between gold and silver, it appears only right to
add this 30 per cent, fall which is due to another cause to that
amount, and it becomes 56 per cent. ; a total fall which facts
disprove. The result of the operation of that which appears to meto be the true cause, is the appreciation of gold. But it would not
be true to attribute the alteration in prices to the appreciation of
gold in the sense described under the first alleged cause. The true
cause of the change in prices in Great Britain would be the decline
in the gold price of silver, in other words the dislocation between
gold and silver.
9. With regard to the second of the alleged causes of the
decline of prices generally in Great Britain since 1873, viz., the
diminished cost, or over production of commodities generally. It
is stated to account for declining prices in Great Britain, that
* The difference between the sensitiveness of the monetary systems of the
two countries may be compared in the one case to a well-strung Eolian harpwhich responds to every breath of wind, whereas in the other case the harp is
at best but ineffectively strung.
t In one of the Numbers of the " Fortnightly Review " for 1872, Cliffe Lesliegives his opinion that the value of money is a local affiair, even in Prussia. I havenot the material on which to form an opinion whether or not in this catastrophic
period since 1873, gold has preserved a level of value in Great Britain, theUnited States of America, and Western Europe. The conditions of themonetary systems of Great Britain compared with the other countries alludedto, present some wide and characteristic differences.
150 APPENDIX.
between two periods 1873 and 1887, the outlay of value giving
factors necessary to produce a given weight or length of anything
possessing exchange value has diminished to the extent of 30 per
cent, in the fourteen years. It would appear to be exceedingly
difficult to estimate changes in a good many of the items which
mate up the value giving factors embodied in anything without
using the measure of price. There is one, however, and that the
chief factor, viz., labour, upon which manual labour saving machi-
nery must have had a very considerable effect, but whether it has
had anything like an equivalent effect to the fall in the gold price
of silver during the past fourteen years I am quite unable to judge.
I should be disposed to think it has not. But as this is a perfectly
distinct cause to the dislocation between gold and silver, the 30 per
cent, attributable to this must be added to the 26 per cent, due to
the dislocation, which makes a general fall of 56 per cent, in
British prices. Facts do not confirm this. Besides, if there have
been economies in the production, &c, of wheat in India,* have
there not been corresponding economies in the production, &c, of
Manchester shirtings ?
10. With regard to these last two reputed causes, I feel no
diffidence in asserting that if the gold price of silver should
become 44 parts of silver to one of gold there must be a pressure to
adjust prices generally to that relation, and that in all probability
it would take the shape of a further decline of prices in gold
standard countries. In that case I venture to affirm that there can
neither be an appreciation of gold in the sense of the first cause,
nor proportionate economies in the expenditure of value giving
factors on the production of commodities, which will cause any one
to question whether the fall in the gold price of silver was the
true cause of the decline in gold prices generally in Great Britain.
11. Is there any remedy for debtors—states or individuals—of
deferred obligations. Some advocates of local dual standards insist
upon the world or so many countries as they think may give per-
* For centuries past there have been two currents of counteracting tendencies
in India 'which have been very largely intensified since the introduction of
railways into that country. One is the extension of the monetary system to vast
numbers of the people, the tendency of which should be to reduce prices there.
And the other the cheapened cost value of commodities, chiefly attributable to
diminished cost of carriage and the rendering accessible to trade fresh tracts of
country which would tend to raise prices there through the greater work the
same amount of standard metal could perform.
APPENDIX. 151
manence to the arrangement, endeavouring to carry out their
theory on the proportion of 15| of silver to one of gold. Other
advocates of the same system desire to engage the world or less to
endeavour to carry out the fixed relation theory on the present
relation. Many advocates of the system admit the truth of the
aphorism* at foot, and the possibility of the cheaper metal becoming
the only standard, but add that such an event would not signify as
the world does its business on paper, and that it should carry that
about rather than metal. To all this, the answer is that the addi-
tional knowledge gained during the past fourteen years of the
principles which must govern a sound monetary system based upon
an effective metal standard, precludes the attempt. It is likely
that, for a long time to come, whilst silver is finding its exchange
value in nearer relation to its cost value, that general prices will
be fallacious guides to values. We may hope that when the last
vestige of protection is removed from silver, that in consequence
of the fall in its gold price, production will be so curtailed as to
save it from the very great fall which to some people, at present,
appears inevitable.
The genius who may devise some means, without an overt or
covert attempt at a fixed relation between gold and silver, to relieve
debtors from the additional burden which the break down of the
* " No two different substances can be exchanged for any length of time
on parallel lines of quantities or values, neither can they be produced for
any length of time on parallel lines of cost." The conclusion from this is
that local dual standards are unnatural, unscientific, and unworkable. It
has been pointed out more than once that if periods in history recurred just
now -with regard to the compaiative output of gold and silver and on the
present comparative cost of the two metals, within forty years there would not
be any gold currency, it would have been driven out by silver even though all
the world had embraced bi-metallism.
As an instance of lamentable ignorance, even among educated people in
official positions, where a better understanding might be expected, the defini-
tion given of double standards or bi-metallism in the last valuable report
issued by the Mint Master of the United States of America is " where its
standard silver coins are unlimited legal tender, the same as its gold coins."
This is the distributive side of bi-metallism. Without the receptive side as
well which is that the metal must be received in unlimited quantities, there is
no bi-metallism. As a fact it does not exist in the world at present.
It is hardly a fair representation of the monetary position of the world to
assert that silver is discredited because certain countries in Western Europeand North America have ceased their efforts to combine that metal with goldas their standards. Of the 1,030,000,000 people within the comity of trading
nations, whose interchanges as separate communities among themselves are
measured by a more or less effective metal standard, 700,000,000 people mostfreely exchange any of their productions for silver.
152 APPENDIX.
montrous delusion of bi-metallism has entailed, and without
injuring the residents of Great Britain and other countries which
may be similarly situated, will earn a very prominent niche in the
Walhalla of the nations of the world.*
The following are Mr. Norman's writings on monetary subjects since 1883.The articles which subsequently appeared in " Local Dual Staudards,"printed by Cassell's, have 1 attached. Those in this present pamphlethave 2 attached.
* In the columns of the London Chamber of Commerce Journal. A demonstra-tion that Professor Stanley Jevons was not a Bi-metallist, August, 1883." Function of gold and silver currency in the internal and international trans-actions of countries, international indebtedness, and the simplification of ex-change," in the numbers for July, 1
2
August, September, October, November,and December, 1883; March and May, 1884. A refutation of the views of Mr.Dunning M'Leod, that the sole essence of wealth is exchangeability, January,1884. Aletter on the proposed degradation of the half-sovereign to a token, May,1884. " On Coinage Charges," May, 1884. "On the production of gold and silverin the United States of America," January and March, 18S5. The "Com-parative cost of the production of gold and silver, and the comparative yieldof grains of gold and silver per ton of ore," June, July, August, September,and December, 1S85 ; February, May, 1 July, 1 and October, 1 1886 ; January 1 andMay, 1887. A letter on decimal currency, August, 1887. "A scientific
automatic physical standard currency, September 1885. On the questionwhether the " Dislocation between goid and silver, or the appreciation ofgold, produced the disturbance in gold prices," October, November, andDecember, 1887. " On the present position of the universal currencydilemma, and the probable results of the possible future action in connectionwith the same," March, 2 April,2 May, 2 June, 2 1888. Lecture read at theLondon Institute of Bankers, reported in the March, 1887, number of theInstitutes Journal, namely, " An elucidation of the metallic bases of thecolonial and foreign exchanges, and the simplification of exchange."" Norman's Exchange Calculus," November, 2 1888. In the Bankers' Magazine,"Norman's Single Grain System," for determining the par value of all
moneys of account and gold and silver coins between all countries : also,
for ascertaining the comparative weights of fine gold or silver indicatedby relative prices throughout the world ; May, 1887. Appreciation of gold,July, 1887 ; on Professor Nicholson's " Money and monetary problems," July,1888; "An effective metal standard," August, * 1888: "Money and monetarysystems," October, 2 1888 ; "Norman's Single Grain System," September,"2
1888. " A memorandum prepared for the Royal Gold and Silver Commissionof 1886-8, on the cause or causes of—(1) the world-wide fall in the gold priceof silver, and the rise in silver price of gold, and (2) the fall in the prices of
commodities generally in Great Britain since 1873," November, 2 1887.
APPENDIX. 153
THE PRESENT POSITION OF THE UNIVERSAL
CURRENCY DILEMMA AND THE PROBABLE
RESULTS OF THE POSSIBLE FUTURE ACTION IN
CONNECTION WITH THE SAME.
January, 1888.
By John Henry Norman.
In attempting to depict the present position of the currency
dilemma, I make use of the first report of the Commissioners on
currency issued last year, Dr. Soetbeer's " Materialien," the pro-
ceedings of the British Association at their meeting last year at
Manchester, the reports of the Directors of Mints, U.S.A., and
the utterances of responsible Statesmen on the subject. I shall
work into this article the material furnished by the Director of
Mints, U.S.A., in his report for the calendar year, 1886, received
by me on the 9 th August.
Utterances of Responsible Statesmen.
Among the followers of the leaders of the advocates of local
dual standards, I meet with a good many who claim the present
Chancellor of the Exchequer as among those who are in favour of
bi-metallism. Since many of these gentlemen are not, like their
leaders, at home with the opinions expressed by the Right
Honourable Gh J. G-oschen on this matter, I would, in justice to
this learned and high authority upon currency matters, make the
following quotations from the proceedings of the International
Conference held in Paris in 1878.
Remarking on facts submitted by Mr. Feer-Herzog and a pro-
position made by Mr. Horton, Mr. Goschen said, "What Mr.
154 APPENDIX
Horton has asked was that the Conference should pronounce onthe utility of the relation irrespective of the present possibilities or
impossibilities of establishing it. Now he did not consider it
necessary to give a categorical reply to a question thus hypotheti-
cal^ put ; but, if the character of the question were changed bythe question of principle being no longer separated from the ques-
tion of execution, he would modify also the character of his
answer, and would not in that case hesitate to affirm, as Mr. Feer-
Herzog had done, the entire and absolute impossibility of the estab-
lishment of afixed ratio, and this for many reasons of a scientific
and economic nature, which he need not enter into in detail." Againat the same conference, he is reported to have said, " I merely
desired to combat the theory of the economists who demand the
universal adoption of the single gold standard, a measure which, in
my view, might be the cause of the greatest disasters. I main-
tain my assertions in this connection absolutely. I believe that it
would be a great misfortune if a propaganda against silver should
succeed, and I protest against the theory, according to which this
metal must be excluded from the monetary systems of the world.
But from my words no opinion ought to be deduced in favour of
the adoption of the double standard
—
a system to which my colleagues
and myself are entirely opposed, and which has against it the public
opinion of the nation which I have the honour to represent. As for
the desire which has been expressed that the hope be left open
that some day a fixed relation may be established between gold
and silver, and an international value given to them, the English
delegate declared that in his view it was impossible to realise this,
impossible to maintain it in theory, and that it was contrary to the
principles of science." (Extract from the International Monetary
Conference, August, 1878, "Washington Government Printing
Press, 1879.) However great the dilemma the world is in, or
however great any course of action may cause it to become, it is not
likely that these decisive opinions on questions of principles could
be changed by anyone holding them on the strength of honest con-
viction, and we may be sure from all Mr. Goschen has said upon
the subject since 1878, that his views are not changed. In support
of this, reference can be made to his speech to his constituents, at
St James's Hall, London, on the 7th July of last year, when he
placed " this fierce controversy " about the fixed ratio third to light
gold and £1 notes, and stated that the Government " could not
APPENDIX. 155
allow these questions to drift without bringing them at last to a
real authoritative decision," after studying them in the autumn.
I know of no responsible statesmen who has said anything to
favour the aspirations of the advocates of local dual standards.
Production of Gold and Silver.
The production of gold and silver in the United States of
America during 1 886 is returned by the Mint authorities of that
country as follows in the 22 States.
The following Table gives the amount yielded in each State
against the yield of 1885, 1884 and 1883 exchange at
$4-86 per £. 000 omitted.
1886. 1885. 1884. 1883.
Gold. Silver. Gold. Silver. Gold. Silver. Gold. Silver.
Alaska 90 1 62 1 41 61Arizona . 228 697 180 780 191 925 195 1,070California 3,018 287 2,606 513 2,670 615 2,905 300Colorado . 912 3,280 862 3,246 871 3,280 843 3,574Dakota 553 86 657 20 676 31 658 31
Georgia . 31 27 — 28 40Idaho 369 738 370 709 256 569 288 432Montana . 907 2,542 666 2,067 443 1,435 371 1,235
Nevada . 633 1,025 637 1,233 717 1,147 518 1,118
New Mexico . 82 471 164 616 61 615 57 580North Carolina 35 1 31 1 32 1 34Oregon 203 1 164 2 135 4 136 4
South Carolina 3 9 — 12 12
Utah 44 1,332 37 1,386 27 1,394 28 1,158
Washington 30 16 25 14 18 17
Texas, Alabama,Tennessee,Virginia, Ver-mont, Michi-gan and Wyo-ming . 1 42 18 1 18 2 7
7,139 10,519 6,525 10,588)
6,196 10,018 6,170 9,602
£17,658,000 £17,113,000 £16,214,000 £15,672,000
This shows an increase in gold over 1885 of 9*4 per cent., and
156 APPENDIX.
a decrease of silver of 0*6 per cent. This sudden check to the
previous yearly advance of the output of silver is not prominently
dealt with, but may be due to the decreasing gold value of the
metal. Reasons are stated why reliable information of the quan-
tities of silver produced cannot be obtained, and why its value in
gold should be estimated at 16 parts of silver to 1 part of gold.
It was Dr. Soetbeer's suggestion that the weight of silver
should be measured by the gold dollar according to its market
value. In reply to the arguments advanced against adopting Dr.
Soetbeer's suggestion, I would say that so long as countries meet
their international engagements in gold their standard is gold, and
such silver as they possess in circulation or reserves is but the token
of the standard, and therefore should not be laken at a value greater
than the market value in estimating the reserves. I would recom-
mend that statisticians should treat weights rather than denomi-
national values in dealing with gold and silver if one only is used.
On the world's production of gold and silver there is no return
for any later year than in the preceding report. There is a readjust-
ment for the years 1883-5 : this readjustment shows the following
changes, 000 omitted :
—
1885. 1884. 1883.
Gold. Silver. Gold. Silver. Gold. Silver.
This report .
Last ,,
£21,70220,883
£25,406
25,667
£21,076
19,535
£23,75923,605
£19,652
19,312
£23,398
23,969
£819 + 261- 1,541 + 154 + 340- 571-
I had remarked in my epitome in sterling of the United States
Mint Report for 1885, published in the Lond n Chamber of Com-
merce Journal, that I had heard that the East, India, China and
Borneo, produced £1,500,000 precious metals per annum. For
the first time China figures in these revised returns as contributing
£1,087,000 of gold in 1883, £1,276,000 in 1884, and £953,000 in
1885. The annual weights of gold and silver produced in these
three years were—Gold, 1883, 147-050 tons; 1884, 155-652 tons;
1885, 161-846 tons; silver, 1883, 2,792-239 tons; 1884, 2,833-489
tons; 1885, 3,041-867 tons.
APPENDIX. 157
Estimated Production of Gold and Silver in Tons and Cwts.
Avoirdupois and Pounds Sterling : Silver 15| parts to 1 of
Gold, during 403 years, 1482-1885.
Years.
98 ended 1580
100 „ 1680
10050505
1780183018801885
Gold.
Cwt.11,926
16,591
34,564
15,521
123,07014,948
216,620
£82,750,420115,110,000239,800,000
107,672,000853,855,000
103,706,076
1,502,893,496
10,831 tons of gold.
Silver.
Cwt.283,965
761,634909,301
717,6711,073,712
257,500
4,003,783
127,030,000340,961,500
407,018,085321,243,290480,667,920
115,257,000
1,792,177,795
200,189 tons of silver.
The silver is not taken at its present market value. That would be
£1,322,849,903. One hundredweight avoirdupois of fine gold is
£6,938. What the production of gold and silver had been from
the earliest times to A.D. 1481 is entirely conjectural. There must
have been a very considerable weight of gold and silver in one
form or another upon the surface of the earth in the service of
man, or hoarded, before 1481. For the 52 years ended in 1544 the
recorded annual average output of gold was 126/y cwts.,
£877,128; and of silver, 1,315 cwts. ; or at 15| parts of silver to
1 of gold, £590,636. The following is the recorded proportionate
weight of output of gold and silver during the periods mentioned :
fluctuating weight of silver to 1 of gold :
—
Silver to Silver toYears. Gold. Years. Gold.
1493 to 1544 = 52 10-41 = 1 1851 to 1870 = 20 5-42 = 1
1601 „ 1700 = 100 40-81 = 1 1871 „ 1880 = 10 12-24 = 1
1701 „ 1800 = 100 25-71 = 1 1493 „ 1840 = 348 33-70 = 1
1801 ,, 1840 = 40 39-10 = 1 1881 „ 1885 = 5 22-23 = 1
Proportionate Annual Production of Gold and Silver.
Enthusiastic adherents to the theory of local dual standards
have advanced the statement that the proportion of 15£ parts of
158 APPENDIX.
silver to 1 part of gold is a natural relation. The foregoing
return of the statistical position of this matter must entirely
dissipate such an idea. Dr. Soetbeer's tables show that there was
a period of 40 years ended in 1620 when the annual average
proportion between the output of gold and silver was 53 parts of
the latter to 1 of the former. With regard to the future, I believe
that a great number of experts connected with gold and silver
mining consider that these industries are but just out of their
infancy, and that what with deep mining and cheapened methods
of the separation of the metals from their surrounding ores, the
annual yield will be greatly increased.
Professor Nicholson, in his evidence before the Royal Currency
Commission, stated the opinion of Ppofessor Geikie (Question 5524),
which is, " I see no reason for believing that the production of
silver will become relatively greater than it is at present. The
average annual yield of gold may increase as fresh mining districts
are opened up, and the same may be the case with silver. But over
a number of years the relative proportion of the two metals will
probably not vary much." This opinion is not shared in by experts
who are quoted by Dr. Soetbeer in his " Materialen," nor by speakers
on the subject at the recent meeting of the British Association. I
should conclude from their statements that they might hazard some
opinion with regard to the output of gold, but that they could not
do so with regard to the output of silver, the possible supplies of
which appear to them inexhaustible.
Comparative cost of the Production of Gold and Silver.
In the evidence given by Mr. S. Pixley before the Select Com-
mittee of the House of Commons in March, 1876, question 213, he
stated that, in new mines in Mexico, he believed that silver could
be got out at Is. 6d. per ounce, which is at the proportion of 52-4
parts of silver to one part of gold. Mr. Pixley has also given
evidence before the Royal Commission, 1886-8, and in answer to
questions 232-236, he stated that " very few mines can produce
silver for less than 85*4 cents., which is equal to 3s. 6d. per ounce.
One or two large mines were shut down because the workmen
refused to reduce their pay ; he was allowed to mention that the
Blue Bird mine, in Butte city, can produce silver at Is. 2 9d. per
ounce, and he quoted what the chairman of one of the largest
APPENDIX. 159
mines in Montana stated, which was, " we can produce our silver
at Is. 6-3d. per ounce." He assumes that his correspondent took
the cost of production at 3s. 6d. per ounce for the general country
of America, north and south. (Question 243.) Professor Roberts-
Austen, of the Royal Mint, London, presented a statement to the
Commissioners on Currency in 1886, showing the weight of silver
obtained from the four different sources in 1883, and the average
cost of the same at 20 pence per ounce, on which, if 1 5 per cent,
is taken for interest on capital, the cost is brought up to 23 pence
per ounce, or forty-four parts of silver to one of gold.*
It must be noticed that these statements of Messrs. Pixley and
Roberts-Austen are the gold values of silver. A comparative state-
ment of the cost of the production of gold and silver would be a
very different return, and I should expect that Mr. Roberts-
Austen's promised comparative cost of the two metals at the
present time will show proportions of something like from eighty
to a hundred parts of silver to one part of gold. I have taken
great pains with the quotations of actual yields of gold per ton of
ore, in California, and of silver per ton of ore in Colorado, as
recorded by the Mint authorities of the United States of America
for the years 1883 and 1884. I am not aware that any error has
been found in them ; I am, on the contrary, under the impression
that our London Mint authorities have gone through them without
discovering any discrepancies to which they could draw my atten-
tion. It is true that the President of the Colorado Silver Alliance
considered that there was no truth in the statements I drew up in
connection with these figures, and therefore none in the conclusions
I arrived at, and he was kind enough to furnish me with informa-
tion of yields of silver, and cost of production in Colorado. Having
this, and also information with respect to gold, from the Mears
Chlorination Company, I made a comparative statement of the
cost of gold and silver, with the result given in detail in the Janu-
ary, 1887, number of the London Chamber of Commerce Journal,
viz., ninety-seven parts of silver to one of gold. There are advocates
of the local dual standards theory, who now desire that no definite
* The Professor's estimate is, I believe, confirmed by Professor Egleston,of the School of Mines, New York. Professor Egleston, who has manifestedmuch interest from the first in my investigations into the present comparativeaverage cost of the production of gold and silver, considers that my estimatesare likely to prove not far from the mark.
160 APPENDIX
conclusion should be arrived at in this country or elsewhere, until
this question of relative cost of production is settled. The bi-
metallists examined by the Royal Commission advocated the relation
of fifteen-and-a-half to one. There are some bi-metallists whodeclare, that rather than adopt fifteen-and-a-half to one, when the
market rate is twenty-one to one, they would become mono-
metallists. The proposition to wait until the present relative cost
of the production of gold and silver is determined, is utterly puerile,
for it may be one proportion this year, and something quite
different five years hence. That thoughtful men could make such
a proposition only shows the delusive straits into which unsound
theories lead people.
Distribution of Gold and Silver.
We have seen under the head of production of the precious
metals, that during the 403 years, 1482-1885, the weight and value
of gold and silver produced in the world, according to the accepted
statistics, J or what they are worth, was at fifteen-and-a-half parts of
silver to one of gold.
Gold.Tons.
Production in 403 years 10,831 £1,502,893,496
Estimated currency, circulation, and re-
serves of the whole world ... say £700,(00,000
Balance for other than currenoy purposes \ £%Q2 893 496besides Stocks in 1481 )
Silver.
Tons.
Production in 403 years 203,926 £1,792,177,795
Estimated currency circulation, and re-
serves of the whole world ... say £650,000,000
Balance for other than currency purposes \ ^ ^ 177 795besides Stocks in 1481 J
' ' '
Dr. Soetbeer estimates the gold currency and reserves of the
civilised countries of the world at £657,000,000, and the silver
currencies and reserves of the civilised countries of the world at
£384,000,000. In a return of the United States of America Mint
authorities for the year 1883, the gold, silver, and paper circulation
of thirty-nine countries of the world is given at, gold £677,698,000 ;
silver £566,791,000; notes £811,470,000* In this return India
* See London Chamber of Commerce Journal for June, 1885.
APPENDIX. 161
is put down for £213,620,000 of silver. But there is no silver for
Russia or any part of tlie East, except India and Japan.
Messrs. Gibbs and Grenfell, in their book on bi-metallism, assert
that gold and silver would not have the value they possess if they
were not used as currency, in fact they deny that these substances
are merchandise because they are used as currency. These tables
show that mucli the larger portion of these substances is used for
other than currency purposes. At the same time these gentlemen
complain that there is not enough gold for currency purposes, and
might adduce the fact that at least three-fourths of the present
annual supply of gold goes for other than currency purposes.* In
fact the present annual supply of gold continued for 35 years
would be sufficient to furnish a sum equal to the world's present
gold currency. Dr. Soetbeer estimates the annual industrial use
of gold in the world at about 90 tons, or £12,291,030. India
absorbs gold annually at the average of £4,587,000. These two
sources alone take for other than currency purposes £16,798,000
per annum.
The Doctor's estimate of the gold reserves held by the Trea-
suries and Banks of Great Britain, the United States of America,
Australia, France, Belgium, Italy, Netherlands, Austria-Hungary
Russia, and Sweden, Norway, Denmark, and Switzerland.
000 OMITTED.
£ £1877 . 141,330 1882 . 199,0501878 . 139,390 1883 . 224,940
1879 . 171,150 1884 . 228.8601880 . 185,340 1885 . 246,4601881 . 190,710
* In Gibbs and Grenfell's " Bi-metallic Controversy" on page 117, amongtbe fundamental propositions of bi-metallists which Mr. Grenfell states theyall assert, his first is the following: 1. "That the precious metals used for
circulation are so large a proportion of the existing mass that the amount in
use for any other purpose is too small to have any influence on their value."On page 369 Mr. Gibbs states that mono-metallists and bi-metallists mustadmit that gold and silver are differently conditioned from all other com-modities in four ways. Under the head of the third he makes this astoundingstatement: " Ninety per cent, of the demand for the precious metals being forone purpose only, that of serving as money, the demand for either of themin any country, and consequently in all countries, is subject to be almostentirely and quite suddenly extinguished by the action of law." A quotationof Seyd's figures of the production and distribution of gold and silver onpage 370 entirely disposes of these inaccurate assertions on the part of theleaders of the advocates of local dual standards.
11
162 APPENDIX.
The estimate of the gold and silver money and bullion given
by the Doctor is as follows :
—
Monetary Supply of the Precious Metals at the end of 1885
in £. 000 omitted.
Gold. Silver. Total.
Great Britain's Colonies without IndiaNetherlands ......France, Italy, Belgium and Switzerland .
Austria-Hungary .....Germany .......Scandinavia ......United States of America.Other Countries in Europe and America .
108,60033,300
3,910205,160
7,82085,2805.620
37,660123,430
45,770
21,120
3,260
13,040156,600
18,190
43,6202,050
13,700
63,28048,900
129,72036,560
16,950
301,66026,000128,908
7,67057,360186,710
94,670
£656,550 383,660 1,040,210
During the 35 years which ended in 1885 the civilised states
of the Western world, including the United States of America and
Australia, coined £1,129,800,000 of gold and £367,050,000 of
silver.
Gold and Silver in the Monetary System of the United
States Bullion and Coin, as per the Hon. James A.
Kimball's Mint Eeport, 1887, in £. 000 omitted.
Increase IncreaseGold. or
Decrease.Silver. or
Decrease.
1873 . . . . 27,675 1,260
1874 30,211 2,536 2,122 8621875 24,832 5,379- 3,970 1,8481876 26,662 1,830 7,465 3,496
1877 34,346 7,684 11,675 4,1101878 43,706 9,360 18,050 0,4751879 60,377 6,671 24,092 6,0421880 72,027 21,650 30,447 6,3551881 98,089 26,062 35,954 5,5071882 103,885 5,796 41,660 5,7061883 110,260 7,385 47,561 5.901
1884 111,827 567 62,391 4,8301885 120,683 8,856 68,113 5,7221886 . 121,107 424 64,010 6,897
1887 . . 1 134,177 13,070 72,363 8,353
APPENDIX. 163
This is a very remarkable statement. In three years 1880-81
and 1887 the United States is represented to have added
£60,000,000 of gold to its monetary system. Doubts are
expressed in the States as to whether the gold in the monetary
system of that country is not over-estimated by £60,000,000.
Foreign and Colonial Rates of Exchange.
There are more than 103 empires, kingdoms, states and islands,
which conduct their international interchanges of commodities, &c,
through the instrumentality of prices or definite weights of standard
metal. In only a few of these countries has barter ceased to exist.
If the world possessed but one satisfactory automatic metal standard,
whether gold or silver, the rate of exchange would be the expres-
sion of a weight of standard metal in country A for a weight of the
same standard metal in country B. If each country of the world
had a satisfactory automatic metal standard gold here, and silver
there, there would be six different expressions of the rates of
exchange. In the present miserable condition of the currencies of
the world, a quotation of exchange may mean one of 18 different
things. The following 18 quotations, which are given as illustra-
tions, should be the extreme or metal points, i.e., the limits to the
fluctuations of exchange. I am not, however, sufficiently acquainted
with the charges in each case to attempt this ; but in no instance
have I taken a greater margin of fluctuation than 4£ per cent.
The weight of fine metal in grains is for the rate quoted
G denotes gold ; S, silver ; IPC, inconvertible paper currency.
164 APPENDIX.
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APPENDIX. 160
Under Universal Local Dual Standards could Gold disappear
from TnE Currencies of tiie World?
It would be too much to expect that bi-metallists should read
the writings of mono-metallists, or that mono-metallists should
read the writings of bi-metallists. Their systems start from such
diametrically opposite bases that there has hitherto been little in
common between them. The exposition of some of the views of
bi-metallists under the strong light of the Currency Commission
cannot fail to have done much good, though no prominence was
given to some of their extreme opinions such as I pointed out in
the May, 1886, number of the London Chamber of Commerce
Journal. I find at question 4,581 of the Royal Commission on Cur-
rency in 1887, this statement by Mr. II. H. Gibbs :" I have always
asked the question, whither would the metal go, and nobody has
ventured to answer it." It was this very question that I essayed
to answer in the November, 1883, and May, 1886, numbers
of the Journal, and the reply was briefly this. I assume
that all the world has embraced local dual standards.
That the 40 years which ended in 1620, during which time
the output of silver, according to Dr. Soetbeer's tables, was
in the proportion of 53 parts of silver* to one part of gold, at once
recurs upon the present yield of gold, not an impossible event
being based on history. That the proportion fixed between the
gold and silver is the old relation, or one not in conformity with
the actual comparative cost of production, but much less silver to
gold than should be. Then the production of silver being un-
naturally stimulated, the mass of silver equal to £2,640,000,000
at 15^ parts of silver to 1 of gold would so saturate and inflate the
currencies of the world—all gold-yielding countries included—that
it might cost 30, 60, 80, or 100 parts of silver to produce 1 part of
gold from the earth, whilst 1 part of gold could be taken from the
currency for 15^ parts of silver, and before the end of the forty
years there would be no gold currency. It would all have gone for
other than currency purposes.
* There is another period of forty years ended in 1811, in which accordingto the same returns the proportionate output of silver to gold was 48*5 partsof the former to one of the latter.
166 APPENDIX.
The Wobld's Standard Monies of Account.
I believe that all the exchanges of the world are commandedby the knowledge of 13 gold and 14 silver weights. I give themwith the names of the countries attached, in which they are
standards.
Noback's work, published in Leipzig in 1879, gives the gross
and fine weights in grammes of 637 gold and 1,452 silver coins.
A work published in a cheap form in Bremerhaven in 1875
contains the fac-similes of 426 gold and 824 silver coins, of which
there are for Europe 316 gold and 663 silver ; for Asia, 22 gold
and 37 silver ; for Africa, 5 gold and 1 silver ; for America,
79 gold and 116 silver; and for Australia, 2 gold. The weights
of the gold and silver coins at present current in the world will
be found in the table at the end.
England, I suppose, may yet be considered the centre of the
world's exchange operations, and, to its disgrace, be it said, that
anyone desiring such information as I have here endeavoured to
present must resort to foreign books for it, where he will find the
weights given in grammes. Noback, the German authority, and
Costes, the French authority, do not agree in the weights in
grammes for all coins. In a lecture which I gave at the Bankers'
Institute in February, 1887, I endeavoured to stir up the bankers
to produce a cheap authentic work on the subject as a fitting
jubilee memorial of Her Most Gracious Majesty's reign. I am not
aware that anything at present has come of the suggestion.
The Changes in the Gold Value of Silver and the SilverValue of Gold between 1872 and 1887.
Gold for Silver.
1872. 1887.
Grains of Grains of Money of Account. Grains of FineFine Gold. Fine Gold. Silver.
10-566 7-857 Eupee 165-
32-533 24-214 Tael 508-5
23-953 17-927 Yen 374-39961324-184 18-00 Trade dollar 378-
24-132 17-954 Mexican dollar. 377-05860722-215 16-633 South American peso 347-22787513-572 10-102 Tical 212-142
APPENDIX. 167
Silver fob Gold.
1872.
Grains ofFine Silver;
1877.Grains of
Fine Silver.Money of Account.
Grains of FineGold-
1766-21
362-92146-07
97-26
86-45
70-04
2373-03487-62196-26130-67
116-1594-08
Pound Sterling
U.S.A. dollar
FlorinCrownMarkFranc
113-001623-22
9-3459856-2227095-5313404-480350
The world has not yet commenced to think of colonial and
foreign exchanges as an interchange of weights of metals or their
tokens, nor of prices as definite weights of standard metal or its
tokens for the commodities priced. I believe this to be of great
importance for the thorough understanding of the subject.
It is not my intention to repeat here what I have written upon
automatic and autocratic metal currencies, nor upon the terms and
conditions of a sound automatic metal standard currency. Suffice
it to say that I have treated of these in the numbers of the London
Chamber of Commerce Journal for July and October, 1886, and
for September, 1887.
I am of opinion that the general ignorance which exists upon
currency and the exchanges is a disgrace to civilisation and a
serious reflection upon the politico-economic and lower educational
teaching of the world. Governments in free countries should see
to it that this state of things shall be remedied, the means for
effecting which appear simple to me.
The Currencies of the World.
I have stated the currencies for 103 countries of the world in
the May number of the London Chamber of Commerce Journal
for last year. I shall not name them here, but will only group
them under gold standard (1), silver standard (2), gold and silver
standard before 1873 (3). £ 000 omitted.
168 APPENDIX.
Area ofmiles.
Population •
(1) Gold standard .
(2) Silver standard .
(3) Gold and silver prior to
1873 ....12,134,02719,504,172
6,809,722
132,890,000
842,450,000
183,743,000
Gold £236,000Silver 229,000
SGold 530,000
) Silver 338,000
£1,333,000
There are thirteen countries of minor importance at present
containing 923,303 square miles and with a population of
17,570,000, the standards of which I am unable to ascertain.
Among the three classes ahove given there are certainly five
countries with inconvertible paper currencies, two on a professedly
gold standard, Brazil and the Argentine Republic ; and three on a
professedly silver standard, Russia* Austria-Hungary and Chili.
How many of these 103 countries have satisfactory automatic metal
standard currencies ? There are at present only twenty-six which
possess mints, and four of the twenty-six are countries with incon-
vertible paper currencies. How many of these 103 countries have
a good circulating medium sufficient for their internal interchanges?
How many have only just such a medium on the seaboard as
enables them to manage their international interchanges ?
The countries which before 1873 ostensibly practised the local
dual standard theory, viz., France, Italy, Belgium, Switzerland,
and Greece, together with the United States of America, whoperhaps may be said to have covertly practised the same theory, are
now credited with possessing £530,000,000 of gold and £338,000,000
of silver, at 15| to 16 parts of silver to 1 part of gold. These
countries estimate their silver for currency and reserves against
notes at 28£ per cent, greater value than it is. I am not sure that
Germany does not practise the same monstrous delusion with a
good portion of her £43,620,000 of silver. To the extent that
* There was an intimation in the Economist of the 22nd October that onthe 1st November, 1887, Russia would issue two new gold coins for 10 and 5
roubles, the fine gold in which would be four times the weight of 10 and 5
francs respectively. The British mint authorities have not received anyofficial information with regard to these coins. It is said to be the intention of
Bussia to have a gold standard.
APPENDIX. 169
this silver is overvalued in gold, these countries might as well
hold as reserves against their notes lands in the Sahara desert or
South Sea stocks. Have any of these countries satisfactory auto-
matic metal standard currencies ?
Would London continue to be the exchange centre of the world
if, as is done in some central cities, a presenter of notes for gold
was asked whether the gold was intended for export, and if so, be
made to pay a premium for it ?
When we are asked to change our currency all these matters
have great weight and should be most carefully considered.
They require also to be generally known and kept prominently in
view.
The Beneficent Action or Telegraphic Communication.
The ordinary method of conducting international transactions, in
other words of effecting purchases and sales of goods, &c, between
countries is to effect sales before effecting purchases. This is
strongly brought out by the Royal Commission on currency. Underthis system all the items, viz., cost, carriage, exchange, commis-
sions and interest, constituting the cost value of any commodity at
the point of sale are determined when it is known that a certain
price or weight of standard metal can be obtained for the com-
modity. I take this fact in connection with another fact which the
Royal Commission has given prominence to, viz., that whatever
change takes place in the relative value of gold and silver it has no
effect to alter the relative quantities of commodities exchanged ; in
other words, it matters not in current transactions whether prices
are high or low, it will not alter in one country, or between two
countries, the quantities, say of piece goods for wheat, or tea for
iron. With regard to wages, the working classes need instruc-
tion in this matter, and it should be dinned into the trading
and middle classes of this country. For my part, I feel grateful
to the Eoyal Commissioners that these two most important facts
respecting current interchanges have been so well brought out by
their examination of the witnesses they have had before them,
and I think them particularly happy in eliciting one of these facts
from such an able, cautious, and staunch bi-metallist as the
secretary to the Indian Council in the Financial department.
I do not hesitate to express my firm conviction that if these
170 APPENDIX.
two truths penetrate the understanding of the trading and working
classes, we shall hear no more of the importence of local dual
standards, as in the remotest degree competent to improve their
position. For, unfortunately at present, few of the population of
these islands are at all interested in deferred payments : and such
as are interested in Savings Banks, Club Funds, &c, are benefitted
by the fall in the gold value of silver. I would urge my brother
associates of the Chambers of Commerce of this country to be up
and doing, with the view of promoting the cause of truth in this
currency controversy.
The World's Great Currency Dilemma.
In what then does the dilemma consist? It consists in the un-
certain course of action which may be adopted by countries which
are heavily loaded with silver, at an unnatural valuation, and the
uncertainty of the relative values of silver and gold.
Revival of Local Dual Standards.
It is two years ago that in conversation with an American
upon this subject, he told me that in his opinion it was a big
dilemma, but that his mind was more occupied with the rapid
payment of the American debt, since the completion of this would
leave little but speculative stocks in his country for prudent people
to invest in. I have often since thought that if this country joined
a bi-metallic convention at fifteen-and-a-half to sixteen parts of
silver to one of gold, and the natural relation became fifty to one
or even more, how our cousins might load us up with silver at the
convention arrangement, and take their pick of such securities as
Great Britain and her colonies afford in exchange for the same.
But in the discharge of the American debt, does there not
appear to be great danger in connection with their currency
system ? The gold and silver for general currency and reserves in
the United States is estimated at £142,501,000 of gold, and
£74,548,000 of silver, at sixteen parts of silver to one part of
gold, together £217,049,000.
The following is a statement of the position of the currency of
the United States presented by Mr. Charles S. Fairchild, the
Secretary to the Treasury, to the Speaker of the House of Repre-
sentatives, in December, 1887 :
—
APPENDIX. 171
compabative statement of metal (gold and sllver) and
Note Currency in the United States of America in July,
1886, and November, 1887. £ 000 omitted.
In the Country Exclusive of the Treasury.
July 1886. Nov. 1887.Increase orDecrease.
Gold CoinSilver Coin ......
,, ,, subsidiary
73,55210,756
9,462
80,48012,71710,514
+ 6,928+ 1,961
+ 1,052
93,770 103,711 + 9,941
Gold Certificates
Silver ,,
15,590
18,063
20,52532,946
+ 4,935
+ 14,883
33,653 53,471 + 19,818
United States Notes ....National Bank „ .... 66,320
62,41867,941
64,816
+ 1,621
7,602
128,738 122,757 5,891
Total £256,161 279,939 + 23,778
Held by the Tkeasury.
July 1886. Nov. 1887.Increase orDecrease.
Gold CoinStandard Silver
Silver Coin (subsidiary)....Gold BullionSilver ,,
Trade dollars
38,854
37,1566,966
8,878623
37,380
43,9065,016
24,641968
1,427
1,474
+ 6,750
949+ 15,763
+ 345
+ 1,427
91,476 113,338 + 21,862
United States Notes ....National Bank ,,
4,687827
3,133852
1,554+ 25
5,514 3,985 1,529
Total £96,990 117,323 + 20,333
172 APPENDIX.
Total in the Country.
July, 1886. Nov. 1S87.Increase orDecrease.
Gold Coin and Bullion ....Silver „ .... 121,284
63,962
142,501
74,548+ 21,217
+ 10,585
185,246 217,049 + 31,803
Gold Certificates
Silver „ ..... 15,690
18,063
20,52532,946
-f 4,935+ 14,883
33,653 53,471 + 19,818
United States Notes ....National Bank ,,
71,00763,245
71,07455,668
+ 67- 7,577
134,252 126,742 7,510
Total £353,151 397,262 + 44,111
This is a remarkable statement. It shows that in sixteen
months the gold and silver added to currency purposes in the
U.S.A. increased by £31,803,000, namely, £21,217,000 gold and
£10,586,000 silver, nearly equal to three-fourths of the world's
present anmial production of these metals. That the Treasury
obtained about £15,000,000 additional gold during the period, and
£6,000,000 additional silver. That the people increased their use
of gold and silver metal and notes, including metal certificates, by
£23,778,000, besides diminishing their use of National Bank notes
to the extent of £7,602,000. That they increased the use of gold
certificates by £4,935,000, and of silver certificates by £14,883,000.
Adverting to the discredit cast upon the Government returns of
the amount of gold in the hands of the public by the Commercial
and Financial Chronicle in July, 1887, wherein it was estimated
that they had placed the figures too high by £60,000,000, the
present returns may be prudently examined with great caution.*
Mr. Fairchild, in the document we are examining, recommends
* Accepting these figures of the gold and silver currency of the country,one-third is silver and two-thirds gold. Should there be £60,000,000 less ofgold in the country than this statement shows, then the proportion of gold to
silver would be about half and half.
APPENDIX. 173
to Government that measures should be adopted to prevent the
loading up of the Treasuries with useless silver, and suggests that
when a prudent reserve of that metal is exceeded by £1,025,000,
the purchase of silver should cease altogether. He remarks :" If
ever the time comes when the standard dollar goes to a discount,
the people, in the pockets of almost every one of whom will be
found more or less of these dollars, will emphatically demand that
they too shall be redeemed in gold, or made as good as when
issued, and that the purchase of silver bullion be stopped. If the
plan above suggested were now adopted, they would probably never
go to a discount—surely not, except under altogether extraordinary
circumstances—and yet the public would have a supply of them?
limited only by the need and demand of the people for them."
As Mr. Fairchild admits that the silver dollar is only worth 75
cents., he alludes, I suppose, to the time when the American
people generally will know as much about it as he does. He knows
that the coin must be a token, but appears to vainly crave after
making it a standard without a fixed relation to gold.
The question arises, when the National Debt of the United
States is paid off, £198,235,000,* which could be done in less than
ten years, assuming that the same policy with regard to it is
carried on, what can they take as security for their note issues ?
Can they face the present and prospective decline in the gold value
of silver ? I give them credit for knowing pretty well the com-
parative cost of the production of gold and silver, and the possible
output of the world, even at a greatly reduced cost of the pro-
duction of gold. Were silver to go down to 30 pence per
ounce, they would have to rate their silver at its true gold value if
they desire to preserve a true gold basis, which would be a total
decline of 50 per cent., or at £37,274,000. Now, with a metal
currency of £142,501,000 gold, and silver £37,274,000, total
£179,775,000, and no government securities as a backing for
notes, there will be a strong temptation to them to open their
mints to the unlimited reception of silver at the present relation in
their currency. They may argue, what have we better than silver
to take ? The measure will re-habilitate the white metal. France
and the other nations of the Latin Union will follow suit, and
* £26,160,000 of the debt was paid off last year.
174 APPENDIX.
there will be an abundance of oil for the wheels of commerce, high
prices, no distress, and all the world jubilant.
This violent reaction could be accomplished, and would have a
tremendous disturbing influence for a time, the production of silver
would be stimulated, but most likely in the end, the countries
attempting this unnatural juggle would find silver their sole stan-
dard ultimately, and be no better off than if they at once
acknowledge the apparent inevitable, and adjust their currencies to
it as best they can. They may restore the old relation for a little
season. They may mask again for a time the debasing influence
of the cheaper upon the dearer metal. They may create a revolu-
tion in gold prices throughout the world. But they can no more
alter the course of nature, with reference to the comparative cost
of gold aud silver, and their relative quantities in the crust of the
earth, than they can alter the course of the pianet on which we
live.
If the Americans were to act as I have supposed, what effect
would it have upon the rest of the world ? In the first place, all
those who desire to exchange silver for gold, would have the
opportunity of doing so through the local dual standard mints,
gold would find its way into gold standard countries, and prices in
these countries might rise in consequence. The exchange between
gold standard countries and silver standard countries would return
to the approximate par it retained previous to 1872. The Govern-
ment of India, and the salaried classes there in connection with
Great Britain, and holders of Indian securities would rejoice, the
only drawback to all being higher prices in England, which must
accompany this change, as we have before seen.
Silver at its Natural Exchange Value.
But what will be the position if the Americans carry out their
threat to the nations of the Latin Union, that unless they will help
them to keep up the fictitious value of silver, they will let it go ?
This, that silver must yet fall, and no one can say how much.
And the fall will have a very serious and trying effect upon silver
standard debtor countries to gold standard creditor countries. Take
India as an instance, say silver falls to 30d. per ounce, or another 5d.
per rupee, this would necessitate providing in India Rs.50,000,000
to secure the same amount of gold as before the fall, which is
APPENDIX. 175
requisite to meet India's sterling obligations in London. I would
ask, if twelve years ago it had been predicted that by this time
India would have to bear such a saddle, would not every one have
said, Impossible ? Will it be impossible for India to carry such
another burden in the future ? How some of the other silver
standard debtor states are to bear the burden of their gold obliga-
tions I can form no opinion, as I know next to nothing about
them ; but I should think it might become beyond the ability of
some of them to meet them.
It may be of some comfort to the salaried classes of India con-
nected with this country, and to holders of silver securities, that
gold will go proportionately further in gold standard countries in
consequence of the fall in the gold value of silver.
There is an important factor to which I would draw attention.
Let us assume that the fall of gold prices in these islands is due,
as Messrs. Goschen, Gitfen and other competent authorities main-
tain it is, to diminished supplies and fresh distribution of gold. It
would be fair to assume, if there be no change in action or gold
market rates of silver that either this appreciation of gold will
become universal or will be rectified to some extent in this country
through its exchanges with other countries, supposing that those
countries have not experienced the same appreciation. Let us
assume that they experience the same appreciation. Then the
£700,000,000 of gold currency of the world becomes equal in
purchasing power to £910,000,000, a rise of 30 per cent, during
the past 11 years, and whilst at the same time there has been a
great increase in the use of credit instruments both in Europe and
America. On the assumption that the relative values of gold and
silver may become 31 parts of silver to one of gold, the compara-
tive purchasing power of silver measured by gold would be only
one-half of what it now is. That is to say, it would be in the
United States of America £37,274,000 against £74,548,000; in
the nations of the Latin Union, £78,250,000 against £156,500,000j
in Germany, £21,810,000 against £43,620,000 j in Great Britain
£10,560,000 against £21,120,000. Taking the rise in gold at 30
per cent., the purchasing power of gold held by these same coun-
tries would be as follows :—The United States of America,
£185,251,000 against £142,501,000: the nations of the Latin
Union, £266,708,000 against £206,160,000 ; Germany,
£110,840,000 against £85,280,000; Great Britain, £141,180,000
176 APPENDIX.
against £108,600,000. These changes, if it is fair to assumethem, place the United States of America in the following con-
trasted position :— Purchasing power—Gold, £185,251,000;
silver, £37,274,000; together, £222,525,000; by weight at
present—gold, £142,501,000 ; silver (16 parts of silver to 1 of
gold), £74,548,000 ; together, £217,049,000.
This statement does not contain the full force of the future
possible position. I have assumed a further fall in the gold value
of silver, but I have only taken the purchasing power of gold at
its present rate. On the assumption that the gold value of com-
modities, services, &c, must become equal to the gold value of
silver, the position would become something like this, taking the
rise in the purchasing power of gold at 50 per cent, more than in
1873, the £700,000,000 of gold in the currency of the world
would be equal to £1,050,000,000, and the currency of the United
States would equal—Gold, £213,751,000; silver, £37,274,000;
together, £251,025,000; against the circulation, as at present
valued of £217,049,000.
If the late Secretary of the United States Treasury, Mr.
Manning, considered that the country possessed ample gold and
silver to discontinue the coinage of silver and abrogate the Bland
Act, this statement does not show such an alteration as would
render it necessary to delay rauch an operation. The high aim
which Mr. Secretary Manning held out to his countrymen of pos-
sessing a sound automatic metal standard currency, with every
state note having a backing of metal to ensure its payment, mayyet, and speedily be realised in a country rich in gold and silver.
That this can only be attained through sufferings caused by
changes in prices none can deny, but they would be sufferings
worthy of the people and of lasting benefit to their posterity.
APPENDIX. 177
MONETAEY STANDARDS, MONEY AND MONETARYSYSTEMS.
(From the Bankers' Magazine, August and October, 1888.)
An Effective Metal Standard.*
The commercial history of most countries is strewn with the
wrecks which have either been caused or aggravated by ignorance
of sound currency laws. The past fourteen years have served to
throw a flood of light upon the subject of currency for the benefit
of the thoughtful student of the same. Upon Professor Huxley
declaring, at a meeting held in the Mansion House in connection
with the Imperial Institute, last year, that the Jubilee year of the
Queen inaugurated the marriage of science with commerce, his
trained mind—possibly a virgin one on the subject, and therefore
perhaps the better—was sought to assist in determining the terms
and conditions of a scientific automatic metal standard currency.
Commerce has cause to regret that as yet neither his nor any
other fully qualified mind has, so far as the world knows, been
* Suppose countries A and B possess equally well organised bankingsystems but no intrinsically valuable currency or reserves. That in A theunlimited legal tender and final discharger of debts consists of excessive issues
by the State of stamped pieces of paper ; whilst in B it consists of moderateissues by the State of stamped pieces of leather. Within certain limits inter-
changes of raw or manufactured articles, stocks, shares, bonds, &c, could beas freely effected as though the instrumentality of gold and silver were em-ployed. The larger quantity of stamped paper in A, constituting price, thanof stamped leather in B, would have no deterrent effect upon the interchanges.
The high prices for which the goods, &c, of B sold in A would have to begiven for the goods, &c, desired by B, and vice versa with regard to the goods,&c, of A in country B. The impediment to commerce would arise when thegoods, &c, of one country are required by the other in excess of demand for
goods, &c, on the part of the country of whom the requirement is made, sincethe paper in A would have no value in B, nor the leather of B in A. Therecould be no such exchange relation between these countries as substances ofvalue embodied, say, in gold and silver at present affords.
12
178 APPENDIX.
brought to bear upon the subject. In the meantime, I may per-
haps be permitted to state my views of what the requisite
conditions are, premising that the standard must possess intrinsic
value.
1st.—The substance selected must be suitable as far as possible
to the wants and habits of the people, in considerable use as an
intermediary in exchanges among them, and such as is generally
desired by large populations of the earth for other than currency
purposes. It must be received in unlimited quantities by the
State authorities fitted for circulation by them, and made unlimited
legal tender.
2nd.—All State notes and other credit instruments which form
part of the currency must be encashable without question or
delay, and for the actual weight of the standard metal indicated
upon the face of such documents.
These conditions would appear to secure an effective automatic
metal standard for currency purposes. If any one of these con-
ditions is wanting, there would not be an effective metal currency,
neither for the conduct of internal nor for international inter-
changes. These conditions imply, as essential, that the substance
must be largely possessed and freely exchanged both for currency
and other purposes ; and that a true standard can never bear an
agio or premium, in the terms of either another metal or incon-
vertible paper.
Most of the leaders among the advocates of local dual standards
maintain the importance of the substance or substances selected
possessing intrinsic value. Not in the sense that a £10 note
contains the intrinsic value of something less than a farthing, but
a value which it is intended should bekof near relation to those
things for which it exchanges. This is the distinction between
standard and token metal. The latter does not possess the intrinsic
value for which it exchanges for the former. The first is received
by the Mints in unlimited quantities, and is constituted unlimited
legal tender, whilst the second is neither the one nor the other.
Does a legal enactment that 15£ parts of silver shall be equal to 1
part of gold—when the comparative intrinsic worth, measured by
value giving factors, is in the proportion of 25 parts of silver to 1
part of gold—make 1 part of gold worth only 15J parts of silver ?
It may be made to circulate in currencies for a time near the
forced relationship ; but on the testimony of competent judges, the
APPENDIX. 179
underrated metal has commanded, and would command, an agio or
premium in the overrated metal in spite of the law. When this
takes place, some would conclude, and with good reason, that the
standard would become the overrated metal, and of an autocratic
nature resembling inconvertible paper. If the definitions of a
standard which I have given are sound, and it is considered to be
of importance that the different peoples of the earth should possess
suitable sound automatic metal standards to the extent to which
they can use them, for their own benefit primarily, it might appear
that a great deal which some desire to attempt, especially with
reference to Indian currency (and a few advocate in journals
dealing with the subject), is a simple beating of the air, and both
imprudent and impracticable.
France and the United States of America, as peoples, are
reposing in a fool's monetary paradise, which springs from the
delusion that they possess local dual standards. The first insist
that in their currency 15| grains of fine silver shall be worth
1 grain of fine gold, the second insist that in their currency 16 grains
of fine silver shall be worth 1 grain of fine gold, whilst for other
than currency purposes the wide world over more than 22 grains of
fine silver have to be given for 1 grain of fine gold. Mr. Fairchild,
the financial secretary of the United States, and doubtless many other
men in both countries who understand the subject, are fully alive
to the great danger of the position. All the world now, when it
requires gold for currency or other purposes and has silver alone
to give in exchange for it, has to pay an agio or premium of 44|
per cent, to command it. Such an agio as this in silver for gold
will, in all probability, come to be paid by the monetary institu-
tions of these two countries.
Money.
In an article in the Contemporary Review in 1879, entitled
"What is Money?" Professor H. Sidgwick, of Cambridge,
wrote :—" Though we have all of us something to do with money,
most of us are painfully conscious that our acquaintance with it is
very limited." After treating of various things which have been
called money, he states " that the definition which includes bank
notes generally, and excludes other bankers' liabilities, is least of
all to be accepted." Professor Dr. A. Soetbeer, in his Materialen,
180 APPENDIX.
wrote :—" I have in the customary way specified the circulation
of notes according to the official reports ; it must not be omitted,
however, that endorsed bills and deposits at the banks payable on
demand have as great an influence on the quantity of the circu-
lating medium, and of facility for trade, as bank notes. In this
matter it would be more exact to couple these obligations with
the notes issued, and then to compare them with the stock of the
precious metals." Professor C. F. Bastable, of Dublin, in his
article on money in the Encyclopaedia Britannica, quotes with
approval the definition of money given by Professor F. A. Walker,
of the John Hopkins University of the U.S.A., as follows :
—
'.' Money is that which passes freely from hand to hand throughout
the community in final discharge of debts and full payment for
commodities, etc., being accepted equally without reference to the
character or credit of the person who offers it, and without the
intention of the person who receives it to consume it or enjoy it,
or apply it to any other use than in turn to tender it to others in
discharge of debts or payment for commodities." I would remark
upon this definition that a forced paper currency satisfies these
conditions. A valueless media cannot be a satisfactory international
measure ; nor can corn, tea, salt, hides or cowries be so. Nothing
as yet known equals gold and silver. The above definition applied
to this country would embrace the standard substance, which is
gold, Bank of England notes, silver and copper coins to a limited
extent. This assumes, however, that at no time the credit of the
bank, or the Government at the back of the bank, could be
questioned. This definition does not satisfy me. I submit that
there is money and that there are money tokens. In my opinion
money is simply and solely the standard substance, as gold in this
country and silver in India. The tokens of money are all those
instruments used in exchanges and affecting price, which are
known in this country as silver and copper coins, bank notes,
cheques, bills of exchange, promises to pay, book credits—in fact,
all instruments, of whatever nature, apart from the standard sub-
stance used in a country, purporting to pay money at once or at
any future time, are tokens of the standard substance, and true
economisers of the use of the standard substance. I would support
this opinion by the following reasons :
—
1. The standard substance is ordinarily—as it is intended to
be—a measure of general and particular values, though itself of
APPENDIX. 181
variable value. It has an exchange value in some near relation t
its cost value. Other instruments of exchange have not and
not intended to have a correlative value with those thir
which they exchange. The standard substance may be wi.
hides, salt, or cowries, provided they are conditioned as standards.
2. The " elemental might " of weights of standard metal
defined by Professor Soetbeer is not only manifest in the settlem
of international balances of indebtedness, by the transmission
the standard metal—as for instance, gold to this country, silver l
India, but also in prices and rates of exchange throughout the
world.
It is no exaggeration to say that in every transaction into
which price enters, where there is an effective gold or silver
standard, either the actual weight of standard metal indicated by
the price, or one or other of the tokens of the standard metal plays
a part. And further, but for these tokens of the standard sub-
stance the weight of standard metal itself would have to pass
unless a return were made to barter.
Monetary Systems.
In the event of the views expressed by me as to the chief
cause of the decline in prices in this country since 1873 being
found correct an exhaustive investigation into the different
monetary systems of the world, in connection with the present
world-wide monetary dilemma, seems imperative. I am disposed
to doubt whether any country, even the United States of America,
is in possession of the necessary facts to enable it to carry out this
investigation to a satisfactory conclusion. During the past
thirteen years all my efforts to get such information as I consider
essential have failed. In the columns of the London Chamber of
Commerce Journal I have more than once appealed to its readers
to furnish the information, which is of the following nature:
—
Are the financial operations of the Government conducted
through their own treasuries or through the public banks \
Thi-ough what machinery is the standard metal added to the
monetary system of a country ? Has the country a mint ? Whatare the mint regulations ? If there is no mint there cannot be an
effective automatic currency, unless some such arrangement exists
as that which prevails in China, where an authoritative stamp on
182 APPENDIX.
masses of silver indicates its purity, and thereby such confidence in
it is engendered among the people as to ensure its currency. But
unless this is unlimited, both in reception and circulation, automatic
action would not be secured. Are there institutions through the
instrumentality of which the equivalent of the standard metal can
be obtained before the bullion is converted into coin? "What are
the laws and habits of the people in connection with bank notes,
cheques, bills of exchange, and other credit instruments? Howare interchanges effected ?—by barter or through the instrumen-
tality of price, or a definite weight of standard metal ? Not being
able to get this information from any of my mercantile or banking
acquaintances, I sought to interest the Government—first a Con-
servative, then a Liberal one—through the Foreign Office, and
prepared a series of questions which I thought our consular repre-
sentatives in other countries should be asked by the Foreign Office
to answer. I was, however, informed that our consuls had too
much to do, and that it was such a delicate subject that it could
not well be placed in their hands. In the two blue books which
the Gold and Silver Commission has issued containing the evidences
of the advocates of a local single standard and of local dual
standards, this subject does not appear to have been touched. Byexaminers and examinees of this Commission the quantity theory
has been made much of by some, and little of by others. Andthat which is astounding is that so many who would generally be
thought to be possessed of competent knowledge on such a subject
speak of gold and silver as small cfcange.* As to the value theory
of gold and silver, beyond the evidence of Dr. Eoberts Austen,
of the Royal Mints, on the subject, few questions have
been asked, or apparently little thought of the matter
by the Commission. In October, 1883, I wrote in the
London Chamber af Commerce Journal—" These questions of
relation of quantities and relation of exchange values of the
* The impression left on my mind by the perusal of the second blue bookissued by the Gold and Silver Commission is, that it is a complete failure of
an attempt to elevate credit instruments to the same platform as standard sub-
stances. That Mr. Dunning Macleod's views of wealth should have beenbrought forward at all, will surprise a good many readers of the report. It is
to be hoped that in the remaining work of the Commission, which is yet to
appear, expositions will be found of the "Elemental might" of weights of
standard substances ; the value theory of them ; and the different monetarysystemB of the world.
APPENDIX. I83
precious metals are the very kernel of bi-metallism, and further
elucidation under this head of production is requisite." For mypart I cannot arrive at any other conclusion upon this monetary
dilemma than that its base rests upon the value theory. Silver is
sold for what it now fetches because it pays to produce it, and most
likely would pay at present at a much less gold price. It is not
the quantity which has lowered its price. We are told that there
are no stores of silver. If the production does not continue to pay,
then its price must rise, or production must cease. The question
might be asked :—If we are to have this greatly further fall in the
gold price of silver with which you threaten us, would it not be
better to make an effort to remove the silver standard from the
world ? I would reply :—Are we able to make the vaguest guess
as to the gold and silver in the bowels of the earth, their propor-
tionate output in the distant future, or their proportionate cost
value ? The idea of attempting to remove silver from the world as
a monetary standard is surely not worth a moment's thought. It
is neither practical nor prudent.
184 APPENDIX.
AN AMERICAN VIEW OF BI-METALLISM AND ITS
ADVOCATES.
Extract from " Finance."
An Essay by Posey S. Wilson {Member Am. Econ. Soc), published
in Rhodes's Journal op Banking for July, 1888, New York.
"That in the interchange of material things for material things,
of services for services, rights for rights, or any one of these for
any part or more of the others, a medium is necessary is self-
evident.
The inter-relation of these three classes of wealth are
infinite in their permutation, as they vary through the agency of
demand, and it is the function of money to indicate these relations
when they are referred to it.
To avoid the confusion which would result from each man's
using a term of his own as " lots," or " heaps," or "chunks," the
statute makes a general term, " dollar." It ordains that contracts
shall be expressed in dollars, and when tendered in payment for
any past transaction, or proposed interchange, an offer of dollars
shall be final. To complete its work, the statute which has named
dollar as an unit of value, or divisor of value, in the abstract goes
into the material world and selects that which shall be the dollar
in concrete. This, it decrees, shall be a given quantity of gold of
certain fineness, with a Government mark indicating these attri-
butes. This, in our financial system, is the standard of its
characteristics: %%i^ of fine gold or 25 1 grains of gold —$ fine;
i.e., standard gold. Actually, this may vary a little, owing to our
faculties being finite, but theoretically, it cannot vary in the
smallest degree. Even in practice, there must be a relation as
APPENDIX. 185
close as possible between the quantity and fineness, or value, of
the bullion in coins, and the stamp, or denomination—the mint
value as to gold, the market value as to silver. Even so wild a
financier as John Law admitted "it is not the sound of the
denomination, but the value of the metal whioh is to be con-
sidered," and the metal in coin derives its value solely from
demand, and the demand grows out of its fitnesss to stand as the
material sign of the abstract unit of value, though it would, without
doubt, have a value for use even if it were not used as money.
Many misguided, asfc
well as many designing men, sometimes
called by the inexact term, bi-metallists, have sought in vain to
prove that this concrete sign of the unit of value, which is
incidentally the measure of value, standard of value, and
medium of exchange—or as Voltaire calls it, " the pledge and
agent of exchange," and as Turgot called it, " the certificate
that the holder is entitled to something in return for some act or
thing "—is exactly equal to 37 1£ grains of pure, or 412| grains of
standard silver "if all would admit it." Hence they argue that
two standards, or tests of the attributes of this concrete sign of
the unit of value are possible ; and also, because debt is large,
necessary.
For want of space, I refer the double standard argument ; the
three tailed cat argument ; the argument that black is white ; and
the proof that one is equal to two—by means of «2— al — a2 - a2—to a later time, for the double standard argument assumes that
things which are not equal to the same thing, may be made, by
law, equal to each other ; and, conversely, that things which are
not equal to each other may be made equal to the same thing,
Besides, in the United States, the clamour for free coinage of
silver, as the question now stands, does not represent the opinion
of intelligent students and disinterested men, but is merely a con-
spiracy on the part of mine owners, their agents and allies, to
induce the people to consent that through perpetual Governmental
interference, an artificial demand for silver shall be created, and
through that demand, the price of this metal placed beyond the
influence of the natural laws of value, and the price thereby kept
at an arbitrary figure already set by themselves.
If let alone, they will probably insist, after a while, that silver
be made the equal of gold, ounce for ounce, and, indeed, that is the
logical end of their demand."
186 APPENDIX.
"NORMAN'S EXCHANGE CALCULUS."*
Ob an Unit System, as a Geain in the British Isles, &c.;
a Gbamme in France, &c. ; a Ruttee in British India, &c.;
for Determining the Pars of Exchange between all
Countries : Also for ascertaining the Weight of fine
Gold or Silver indicated by Prices in all Countries
possessing effective Metal Standards.
Specimen of information which should be furnished annually by
the Mint, or other State Department, of each country of the World
to its people, in its own weights and monetary denominations. Gross
weights are all important to such—bankers and others—as use
scales.
British Isles, &c.
Expressions are used throughout the world for definite weights of
fine gold and fine silver. One grain of fine gold in Great Britain,
Australasia, Canada and many parts of the Empire is 2*123863
pence ; because the weight of fine gold in the sovereign on its issue
from the Mint is 113-0016 grains. 240 pence, divided by 113-0016,
gives as nearly as possible 2*123863 pence. It is sufficient to take
the expression for one grain of fine gold or fine silver to the third
decimal point, since 2-124 instead of 2*123863 pence gives only l£d.
too much upon £100. So long as any country has an effective metal
standard, be it gold or silver, the metal standard will not command
a premium in any other metal or credit instrument. Attached to
the chief gold or silver coin of each country will be found the weight
of fine gold or silver which it contains on issue from the Mints
* "I think that your "Single Grain System" is most useful for all
practical purposes, and simplifies very much the -whole exchange calculus."
—
Professor Dr. W. Lexis, Gottingen, September, 17th, 1888."
APPENDIX. 187
also the denominational expression* for one grain of fine gold or
silver. These used as multipliers of the weight of fine gold for the
gold or silver for the silver in any of the world's moneys of account
or coins gives the expressions for the weights thus multiplied. To
find the gold price of silver and the silver price of gold, ascertain
the proportion established between the two metals by the market
price of silver in a gold standard country, or of gold in a silver
standard country, thus : say, the ounce of silver (444 grains of fine
silver) commands 42 pence in London ; divide 42 by 444, and the
result is -0946 of one penny, which is the gold price of one grain
of silver; divide 2*124 pence, the fixed expression for one grain
of fine gold in Great Britain, -0946 of one penny, and we get the
proportion at this price between gold and silver, viz., 22-45 parts
of silver to one part of gold. The fixed expression for one grain
of gold, being divided by this proportion, gives the gold price of
one grain of fine silver. The fixed expression for one grain of fine
silver, being multiplied by this proportion, gives the silver price
of one grain of fine gold. Attached to the names of the countries
in the following tables will be found
—
(a) which denotes the posses-
sion of a Mint; (6) that gold is received in unlimited quantities
;
(c) that gold is unlimited legal tender;
(d) that silver is received
in unlimited quantities;
(e) that silver is unlimited legal tender.
The British par value of the gold coins is attached, and the British
price of the silver coins at 42 pence per standard ounce or 444
grains of fine silver. On the thoughtful suggestion of Mr. Alex. L.
CHencross, a column of constants is attached ; being the gold price
in decimal parts of a penny of each silver coin at the proportion
of one-sixteenth of a penny per standard ounce, or 444 grains of fine
silver. One-sixteenth of one penny is the denominational expres-
sion for a trifle more than one thirty-fourth part of one grain of fine
gold.
To find the price of the silver coins at more or less than
42 pence per ounce of standard silver, it is only necessary to add
or subtract the sum of the constants representing the difference to
or from the sterling value column attached to the coins.
* " Men in their bargains contract not for denominations or sounds, but
for the intrinsic value, which is the quantity of silver or gold by pubic
authority -warranted to be in pieces of such denominations."—Locke, 1695.
188 APPENDIX.
Constant*
SterlingValue.
Gross Weighton issue from
the Mint.
Grains of fine
Gold (o) orSilver(s)on issuefrom the Mint.
OneGrain.
Value ofeach Sil-
ver Coinat Atli ofa Penny
y
StandardOunce.
Eueopb and Dependencies.
Great Britain (a b e), Australasia (a b c),
Canada (c), Bahamas (e), South Africa (c),
Jamaica (e), Malta (c), Bermuda (c),
Newfoundland (c), Falkland Isles (c),
Turk's Islands (c), St. Vincent (e),
Granada (c), Tobago, St. Lucia (c),
Leeward Isles (c), Gibraltar (c), Sierra
Leone (c), Gambia (c), Gold Coast (c),
Lagos (c), Cape of Good Hope (c),
Natal c), St. Helena (c), Cyprus (c),
Labuan (c) Fiji (c) — Sovereign or 20shillings or 240 pence, d. 20/- 123-274 G113-0016 2-124d.
J sovereign, \ of above....Shilling or twelve pence -m 87225 880-72937 •149d. •0114d.
Crown, 5/- ; double florin, 4/- ; half-
crown, 2/6 ; florin, 2/- ; sixpence, -/6 ;
threepence -/3
German Empire [a b c) Heligoland (b c)—20 marks or 2,000 pfennings, p., and 10
marks ....... 19/7 122-917896 GllO-6268 18-079p.
5 marks or 500 pfennings, 2, 1, |, ~ marks 3/0| 428-679815 8385-80875 l-296p. •0543d.
Denmark (a b c), Sweden (a b c), Norway(a b c)—20 crowns or 2,000 ores, o., 10
crowns ....... 22/0i 138283115 G124 4542 16.C7o.
Crown or 100 ores, o., 4, 2, \, J, -£$ -m 115-742625 892-5941 l-08o. •0130d.
France (a b c e), Belgium (a b c e), Italy
(a b c e), Switzerland (a b c e), Servia
(fi c e), Roumania {bee), Bulgaria (b c e),
— 20 francs or 2,000 cents, c. 100, 50,
10, 5 15/10| 99-563349 G89-607 22 -32c.
Franc or 100 cents, 5. 2, $, £ -/«* 77-04177 86944567 l-44c. •0098d.
AuMria-Hungary (a e)— Florin or 100
kreutzers, k., 8, 4 . I/llf 12-445418 Gll-20087 8-928k.
Florin or 100 kreutzers, 3, 2, 1£, \, &, -^ l/4i 190-526163 S171-47038 •583k. •0241d.
Netherlands (a bee)—William or 10 florins
or 1,000 cents, c. . . 16/6| 103-844283 G93-45985 10-67c.
Ducat, double ducat .... »/*J ... g53 00394
Gulden or K'O c, 2\, \, <fet £$ i/i| 154 3235 8145-8357 •'686c. •0205d.
Russia (a e)—\ imperial or 5 roubles or 500copecks, c. ..... 16/44 101-0 G92-57043 5.4c.
Rouble or 100 c, $, J, i, t3*, £$ . 2/2* 319-935764 8277-7221 •36c. •0391d.
Spain {a bee)—Isabella or 10 escudos or
1 ,000 centimos, c 20/7^ 129-189396 G116-48355 8-534c.
Dol ar or 100 c, escudos or \ dollar 2 10* 400-625349 8360-56296 •555c- •0507d.
Peseta or £ dollar, fg, £$ dollar -m 864-90074 •0091d.
Poitugal [a bee)—Coroa or 10 milreis or
10,000 reis, r 44/4* 273-692727 g250 88525 39-859r.
\ coroa or 5 milreis or 500 reis 23/11-A G135273807
i „ 2\ ,, 250 „ 1 milreis 3/ 2A ... Gl8 03656 ...
| milreis or 600 reis, r., -£, fa, fa . 1/3 192-904375 8176-828496 2-828r.!-0249d.
APPENDIX.
Europe and Dependencies—continued.
Greece (b c e)—20 drachmai or 2,000 lepta,
1.. 10, 6 .
5 drachmai or 500 lepta, 1, *, * .
Finland—10 markkaa or 1,000 penni, p. 201 markkaa or 100 penni, p., 2
Turkey (a b c)—Medjidie or 100 piastres or4,000 paras, pMedjidie or 800 paras, p., }, *, &, its -
Piastre
America.
United States (a b e e), Liberia {b e e)—Eagle or 10 dollars or 1,000 cents., c,20, 5, 2*. 1
Dollar or 100 c, *, *, &, is •
Mexico {a d e) — Doublon or 16 pesos or1,600 centavos, c. 10
Peso or 100 c, *, \, ^, is .
Brazil (a b c)—10 Milreis or 10,000 reis, r20, 5
2 Milreis or 2,000 reis, r., 1, *, * .
Peru (a b c e)— 10 sols or 1,000 centavos, c
20, 5, 2 1
1 sol or 100 centavos, f, *, -j?g-
Chili [a b c e)— Condor or 10 pesos or1,000 centavos, c. 5, 2, 1
Silver as Peru in pesos.
United States Columbia (d e), pesos,Guatemali (de), pesos ; Venezuela {a be),
venesolanos ; Hayti {e), gourdeBoth gold and silver same as Peru.
Uruguay (e)—4 patacon or 400 centavos,c. 2
?1 escudos
5 real or 50 centavos, 2\, 1\ .
Bolivia (e)— 16 bolivanos or 1,600 cent-avos, e. J, J, i, A
Silver same as Peru, J, J, J, ^g.Argentine Republic [a b c e)—5 pesos or
600 centavos, c. . . . . .
Silver same as Peru, *, J, ^, - e .
Costa Rica (e)—20 pesos or 2,000 centavos, c.
\ pesos or 50 centavos ....Ecuador (e)—8 pesos or \ gold ounce or
800 centavosSilver same as Peru.
Asia.
Persia (a d e)—l toman or 200 shaheis, s. .
1 keran or 2 panabats or 20 s.
SterlingValue.
14/2f
2/5A7/lH-/»*
18/0|
2/5*
-/llX6
41/1
2/11*
64/8|2/ lift
22/5|
2/0*
39/7|
2/8*
37/5|
16/1
l/3if
61/4f
19/711
79/3|
1/3*
31/2|
9/H
Gross Weighton issue from
the Mint.
89-137254345-453154
4978476179-984326
111-359837371-231352
258-
412-5
417-66575417-66575
138-347931393-524925
248908373385-20875
235-3882
103-852200-781046
385-216047
128-603173
497 816746192-904437
209-
53-49032773-785923
Grains of fine
Gold (o) orSilver (s)on issuefrom the Mint.
G80-2235288310-90783
G44-806285669-425519
G102-006296308-116898
S15 406
G232-2S371-257414
G365-4575318377-068607
G126-819968360-731181
G224017535s347-227o75
G211-85066
G90-8703816731753
G346-69545
G115-74262
G44803507S16107515
G176-396
G52-96536870-83448
OneGrain.
24-918.
1-6081.
22-318p.
l-440p.
39-213p.
2-596p.
4-307C•269c
4387c•265c
78852r5-544r.
4-464c
•288c
4-72c.
4-402c.
•299c.
4-615c.
4-32c.
4-464c•310c
4-535c.
3-776S.
•282s.
Constants
Value ofeach Sil-
ver Coinat Jjth ofa Penny tyStandardOunce.
190 APPENDIX.
Constant!
SterlingValue.
Gross Weighton issue fromthe Mint.
Grains of fineGold (g) or
Silver(s)on issuefrom the Mint.
OneGrain.
Value ol
each Sil-
ver Coinat ,'„ t h oj
a Penny
^
StandanOance.
Asia—continued.
India (a d e), Burma («), Ceylon (e),
Mauritius (e)—Mohur or 15 rupees or
2,880 pies, p 29 '2£ 180- G165- 17-454p.
Rupee or 16 annas or 192 p., $, £, £ i/4 180- sl65- l-164p. •0232d.
China (e)—Tael or 1,000 cash, c. 4/0^ 565- s508-5 1-966C. •0716d.
Japan (a d e)— 10 yens or 1000 sen, s. 20,
40/11H 257-206347 G231-48526 4-320s.
1 yen or 100 sen, £, \, $, & . 2/1 If 416- 8374-399613 •267s. •0527d
Cochin-China («) — Trade dollar or piastre
or 100 cents, c £, $, tV • 2/11} 420- • s378- •264c •0532d.
Siam (a d e)— Tical or 8 fuangs, f . . 1/8 23355 8212-142 •0377f. •0299d.
Netherlands India (e)—25 cents, c. -fa, ->fe . -jn 4907487 &35-339085 •707c. •0050d.
Hong-Kong (e), Straits Settlements (<?),
Borneo (e)—Dollar or 100 cents, c. \, |,
2/llf 416- 8374-399613 •267c. •0527d.
Africa.
Egypt (/> c)—50 piastre or 2,000 paras, p.,
100, 25 10/2|f 66-096755 057-83466 69-163p.
10 piastres or 400 paras, 5, 2\ 1 . 1/*A 192-904375 8173-613937 4-608p. •0244d.
Tunis (*)— 50 piastres or 800 karohs, k.
24/- 150-619736 g135 557762 5-90K-.
2 piastres or 32 karohs, 1 m 95-587976 886-029178 •372k. •01214
Philippine Islands {e)—Pesoduro or 100
centavos, c. 4, 2 4/OJ 26-096103 G22-83705 4-379c.
50 centavos, 25, 10, 5 . 1/5 200-311903 S180-280712 •277c. •0254d.
Antilles (c e) — Sovereign, dollar andpiastre.
Three half-pence -m 14-58357 813-489737 •0019d.
Two German books, one by Noback, of 1,234 pages, published in
1879, contains the gross and fine weights in grammes of 637 gold
and 1,452 silver coins, together 2,089 coins of the world ; the other
of 114 pages, published in a cheap form in Bremerhaven in 1875,
contains the fac-similes of 426 gold and 824 silver coins, together
1,250 coins, of which there are for Europe 316 gold and 663 silver,
for Asia 22 gold and 37 silver, for Africa 5 gold and 1 silver, for
America 79 gold and 116 silver, and for Australia 2 gold. Some
countries have the same weights of money of account and coins but
different denominations. If we confine the number of moneys of
account or coins on which the exchanges of the world are at present
regulated to 12 gold and 13 silver, 25 coins or moneys of account
APPENDIX. ¥ 191
in all, then the 2,089 coins of which Noback gives the weights in
grammes present 52,225 different values in the 103 countries of the
world, all of which can be ascertained by the possession of Noback's
book and my tables of values of one grain or gramme of fine gold
and one grain or gramme of fine silver in the various countries of
the world.
There is another German book, " Kruse Hambro Contorist,"
of which Dr. Patrick Kelly, in his Universal Cambist, written in
1811, makes mention, that Sir John Sinclair had a high opinion
of it and recommended its translation into English. Sir John
adds :" Till then we principally rely upon foreign merchants who
make fortunes from our ignorance of the nature of the exchanges."
There is a copy of this work in the British Museum, but it does
not appear that any translation of it into English was ever made.
It is not mentioned either by McCulloch or Stanley Jevons in
their Bibliographies. I am disposed to think that Tate's Cambist
now answers to this work.
The addition of two columns of charges per cent, or per mille
would make such a table as the above complete. One column
should contain the coinage charges of each country attached to
the coin : these would be fixed charges. The other column should
contain a minimum and maximum charge varying with the time
occupied between securing the metal in one country and
receiving the proceeds through the mint in another country,
all transport charges and a fixed interest to be mentioned, say
at the rate of five per cent, per annum. Illustration ; Desired to
know the equivalent gold price in London for a Bill on India
on a price of 42 pence per standard ounce of silver. By one
of the methods shown in this table the par value of the rupee
would be found to be 15*60 pence. The first column would
show 2 and \ per cent., the second say the maximum £of one per cent., together 3 per cent., which added to 15-60
pence makes the price of the Bill 16-07 pence per rupee.
NORMAN'S
SINGLE GRAIN SYSTEMFOR
DETERMINING THE PAR VALUE OF ALL MONEYS OF
ACCOUNT AND GOLD AND SILVER COINS
BETWEEN ALL COUNTRIES.
ALSO FOR
ASCERTAINING THE COMPARATIVE WEIGHTS OF FINE
GOLD OR SILVER INDICATED BY RELATIVE
PRICES THROUGHOUT THE WORLD.
By JOHN HENRY NORMAN.
Reprinted from the " Bankers' Magazine " for May, 1887.
PBICE OITE ZPZEZLsTIISnE-
.
LONDON:—PRINTED BY WATERLOW AND SONS LIMITED, LONDON WALL, E.C.
—
1887.
NORMAN'S SINGLE GRAIN SYSTEM FOR DETERMINING THE PAR
VALUE OF ALL MONEYS OF ACCOUNT AND GOLD AND
SILVER COINS BETWEEN ALL COUNTRIES. ALSO FOR ASCER-
TAINING THE COMPARATIVE WEIGHTS OF FINE GOLD OR
SILVER INDICATED BY RELATIVE PRICES THROUGHOUT
THE WORLD.
By John Henry Norman.
Many of my friends, among whom are a good number who have to do with
foreign moneys of account and coins, are surprised when I tell them that I
have a table and rules whereby I profess that any boy or girl who can work
decimal multiplication and division is enabled to ascertain the par of exchange
between all the countries of the world, and the values of the coins of any
country in all other countries, whatever may be the gold value of silver or the
silver value of gold.
Fourteen years' working of the exchanges in Calcutta made me thoroughly
familiar with the subject, and before I left that city, in 1875, I had formed a
table of the gross and fine weights of the standard and chief subsidiary coins
of the world, with the value of one grain of fine metal attached to each in the
currency of the country where the coin circulates. I pointed out that fine
metal alone was that to be taken account of in the exchanges. This table fell
perfectly fiat in Calcutta, where the whole banking and mercantile community
possessed it, and I am not aware that the issuers of credits in London , to whomcopies were sent, ever saw anything in it worthy of their attention. I received
a recognition of the merit of the compilation from the then Mint Master of the
United States of America, Dr. Linderman, in 1875, but no practical use (so far
as I have been able to ascertain) has been made of my method in the United
States. Observing, in 1882, that the late Professor Stanley Jevons was studying
the subject of legal weights of English coins, I sent him a copy, which led to mymaking the acquaintance of this emiment authority upon certain branches of
currency. Since then I have fairly completed my system in tables, with
directions in my pamphlet on Local Dual Standards*, and my paper "AnElucidation of the metallic bases of the Colonial and Foreign Exchanges and the
simplification of exchange," read before the Bankers' Institute on the 16th
February, 1887.
* Local Dual Standards, published by Cassells.
4 Norman's Single Grain System.
Whether a person favours a "Local single standard" or "Local dual
standards," this simplification of values and the exchanges is equally valuahle to
him, and it is not in my opinion necessary to wait until truth silencos all
dissentients on this disputed question hefore the adoption of my system. There
is one statement which, however, I would advance here, which is—that a metal
to become a monetary standard must he received in unlimited quantities hy the
Mint or other institution of a country, be fitted for currency, and be appointed
unlimited legal tender. I believe that both schools of thought on currency now
admit this, and consequently that where the receptive side of local dual
standards is not practised, though the distributive side is, there no such thing
as local dual standards exists, and that the real standard in those countries, so
long as their international trade is conducted on the dearer metal, is the dearer
metal.
The foundation of my system rests upon the value of one grain of fine metal
in the standard money of account or coin of each country. I present in two
tables, one of fine gold and the other of fine silver, twenty-five different gold
weights of moneys of account, and twenty-five different silver weights of moneys
of account. Of these fifty different weights I think that there are not more
than twelve gold weights, and not more than thirteen silver weights that are
not tokens. It would be with these therefore that calculations would have
to be made in determining the par values of the moneys of account and the gold
and silver coins of the world.
Having the value of one grain of fine gold in the currency of a gold standard
country, the weight of fine gold in any gold coin being multiplied by this value
the result will be the value of the coin in the currency of that country. The
same with regard to silver. To find the gold value of silver coins in a gold
standard country, the gold price of silver may be divided by the value of one
grain, which will give the number of grains of gold indicated by the price, and
this compared with the number of fine grains of silver procurable for the price,
will show the proportion established between gold and silver ; the fixed gold
value of one grain of gold being divided by this gives the gold value of one
grain of silver. The same process with regard to finding the silver value of gold
coins in silver standard countries, but the proportion established between gold
and silver must be multiplied by the fixed value of one grain of silver, and the
result will be the silver value of one grain of gold.
The exchanges are always based upon Mint issue weights between countries
possessing convertible paper currency. For actual weights scales are needed,
and then resort should be made to my large tables in Local Dual Standards,
wherein the gross weights, the alloy and the fine weights are given with the
values of one gramme and one grain in each of fifty-four countries of the world
of the 103 countries, the internal and international prices in which are based
upon gold and silver.
The following are the tables, and the rules are appended. I recommend
anyone who desires to master the system to work out the examples.
Norman's Single Grain System.
U 05
So
fl bo* §
a> £ d 5.IH.Q 3 «!?O O 05 ^l_,
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S 00 *P< *CO y co fe CN COO 5 co o 1; os fcn
^p^.JS Jg§ ? s ^&gg|^g s gggo-SdSdgo=4 d°go§o2<°fto
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•Hk, . m i_,|_|U . M M M M P* f> P* P* I-l f*1 P^ KS
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Norman's Single Grain System.
oo -s 22 3.Soa*
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5.9 g§"C « s »P i- C 7.
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Norman's Single Grain System. 7
Rules and Examples.
Rules for Finding : First, the gold value of a grain of fine gold in countries
where gold is the standard. Second, the silver value of a grain of fine silver
in countries where silver is the standard. Third, the gold value of one grain
of fine silver where gold is the standard. Fourth, the silver value of one grain
of fine gold in countries where silver is the standard.
I. To find the gold value of a grain of fine gold in countries where gold is the
standard : divide the units of the money of account in the country for which the
investigation is made by the weight of fine gold in the money of account onissue from the Mint, and the result will be the answer.
Thus:—There are 240 pence in one sovereign, and there are 113-0016grains of fine gold in a sovereign on its issue from the Mint ; 240 divided
by 113-0016 gives 2-123863, which are pence, and constitute the value of
one grain of fine gold in the currency of the United Kingdom.
II. To find the silver value of a grain of fine silver in countries wheresilver is the standard : divide the units of the money of account in the countryfor which the investigation is made by the weight of fine silver in the moneyaccount on issue from the Mint, and the result will be the answer.
Thus :—There are 192 pies in one rupee, and there are 165 grains of fine
silver in one rupee on its issue from the Mint. 192 divided by 165 gives1*16363, which is one pie and parts thereof, and constitutes the value of
one grain of fine silver in the currency of India.
III. To find the gold value of one grain of fine silver in countries wheregold is the standard : the gold price of silver must be divided by the grains of
fine silver for which the quotation is made, and the result will be the answer.Thus :—Say the gold value of silver in London is 44 pence per ounce, or
444 grains of fine silver ; 44 divided by 444 gives "099099, and this
decimal of one penny is the British gold value of one grain of fine
silver.
IV. To find the silver value of one grain of fine gold in countries wheresilver is the standard : the silver price of gold must be divided by the grains of
fine gold for which the quotation is made, and the result will be the answer.Thus :—Say that the silver value of gold in India is Its. 21. 8a. Ip. per
tola, or 172§ grains of fine gold. Us. 21. 8a. \p., or 4,129 pies divided
by 172-5 gives 23-9362, and this number of pies constitutes the Indiansilver value of one grain of fine gold.
As the tables contain the values of one grain of fine metal in the standardmoneys of most countries of the world, it would be easy to find the gold valueof silver, and the silver value of gold, by forming a table of the relative
proportions of silver to gold established by a gradation of prices and applyingthese proportions as divisors of the gold value of one grain of fine gold to getthe gold value of one grain of fine silver, and applying them as multipliers of
the silver value of one grain of fine silver to get the silver value of one grain of
fine gold.
V. To find the proportion established between gold and silver in a goldstandard country, divide the gold price of silver by the fixed value of one grain
of fine gold, the result will be grains of fine gold ; compare these with thegrains of fine silver commanded by the price, and the proportion will be at
once shown by dividing the grains of silver by the grains of gold. '
Thus :—Say the gold value of silver in London is 44 pence per ounce, or
444 grains of fine silver ; 44 divided by 2-123,863 pence, the fixed valueof one grain of fine gold gives 20-71 grains of fine gold, and this
divided into 444 establishes a proportion of 21-43 parts of silver to 1
of gold.
VI. To find the proportion established between silver and gold in asilver standard country, divide the silver price of gold by the fixed value of
one grain of fine silver, and the result will be grains of fine silver ; comparethese with the grains of fine gold oommanded by the price, and the pro-
8 Norman's Single Grain System.
portion will be at once shown by dividing the grains of silver by the grains of
gold.
Thus :—Say the silver value of gold in India is Rs. 21. 8«. Ip. per tola,
or 172^ grains of fine gold ; Rs. 21. 8a. Ip., or 4,129 pies, divided by1*16,363 pies, the fixed value of one grain of fine silver, gives 3,548*3
grains of fine silver, and this divided by 172| gives a proportion of
20*34 parts of silver to 1 part of gold.
Table of Proportions established between Gold and Silver by thefluctuating london price of one ounce of sllver, or 444 grains of
fine Silver.
Col. I. Col. II. Col. I. Col. II. Col. I. Col. II. Col. I. coi. n.
o d«t-io o
« £3 tOp* o a
hH>
mCO rn
p-s§
u>Um
§8"o
p- 5 a
B>
00
o o
> o a
um>
m
London
Gold
of
Silver
per
or
444
grai
fine
Silver.
•82ASoo
i-
S
London
Gold
of
Gold
per
i
or
444
grai
fine
Silver.
o2
PLondon
Gold
of
Silver
per
or
441
grai
fine
Silver.
*S2
oO8°&S3CM
London
Gold
of
Silver
per
or
441
grai
fine
Silver.
o2a °Sos°Of*
d. d. d. d.
64 14*73 45| 20-61 43£ 21*80 40| 23-14' 62 15*28 * 20*77 43 21*93 i
2" 23-28
60 15*71 A4 20-84 f 22*05 I
23*43
55 17*15 45 20-95|
22-15 40 23-57
50 18*86 1 2107 i4" 22-32 35 26*94
47 20-06 i2
21-19 42 22-45 30 31*34
f 20*17 14 21 32 4 22*59 25 37*71
i2 20-28 44 21-43 1
5 22*72 20 47*15i4
20*39 f 21-55 l4 22-86 15 62-87
46 20-50 i
t 21-68 41 22*99 10 94-30
Pars of Exchange.
It is not through an oversight that this paper does not treat of the limits to
the fluctuation of exchange, or metal points. To deal with this it would borequisite to know the conditions upon which each country can add to its
standard metal currency and the cost of effecting the same. I am acquainted
with these charges for a few countries only. They consist of coinage, packing,
carriage, shipping, freight, insurance of the metal, interest, and a small com-mission if the business is undertaken by another. They will vary in total
amount from £ to 3^ per cent, on the par of exchange, above or below the par.
If I could present all these charges for each country in a percentage form onthe par of exchange, this knowledge, together with the pars of exchange, could
they be generally possessed, would not afford a sure guide to the rate of
exchange of the day. This rate depends upon the stato of the trade of the
countries between which the rate is quoted. If the state of the country
necessitates shipping standard metal, the rate will be one figure ; if it
necessitates the import of standard metal it will be another figure. None but
those who are intimately acquainted with the trade can state accurately whatthe rate of exchange between two countries should be. It will, therefore, be
seen that bankers, bullion, exchange dealers and brokers should offer noopposition to the spread of the knowledge of the pars of exchange, or to the
limits to the fluctuation of exchange, as their functions are not trenched uponby the general possession of such knowledge.
A Traveller's Experience.
Travellers do not now take the coins of one country into another country;
but, as a rule, they procure letters of credit under which a bill of exchange can
Norman's Single Grain System. 9
be drawn and negotiated, and thus the traveller becomes possessed of the monoyof the country in which he is, according to his wants.For my present purpose, as illustrations of my tables and rules, I assume that
a traveller takes metal money—gold and silver—about with him.A traveller from the United States of America has reached London with gold
and silver dollars, and desires to exchange some of them for English money.He knows that both gold and silver dollars are unlimited legal tender in thecountry which he has left ; he turns to my tables, and he finds that gold onlyis unlimited legal tender in England. Under the head of gold in England hefinds the value of one grain of fine gold is 2* 123, 863 pence, and under the headof the United States A. he finds that the weight of fine gold in a dollar is 23*22
grains ; he multiplies 2-123,863 by 23-22 and he gets 49 -316 pence, or 4s. l^d.for one gold dollar; or for $5—246*58 pence, or £1 Os. 6%d., or double this
amount for a $10 piece. This is the intrinsic worth for his gold in Englishmoney at Mint issue weights. He should generally get about this sum for his
unabrased gold coins, because the English Mint makes no charge for puttingour Gracious Sovereign's effigy on the gold, and its appropriate alloy, in place
of the effigy of the United States.
He also desires to convert some of his silver dollars into English money. Heturns to my silver table and finds that the Mint is not open to the unlimitedreception of silver in England, and consequently that he must sell his dollars at
the gold market price of silver of the day, unless he can find some one to buythe silver dollars for remittance to the United States, in which case he should
get a better price than for bar silver. He finds that the Times quotes the
market value of silver as 47 pence per ounce, or 444 grains of fine silver ; hedivides 47 by 444 and gets "105855 of a penny as the value of one grain of fine
silver. He finds by the table that there are 371*2514 grains of fine silver in
a dollar at Mint issue weight, and he multiplies that by •105855 and gets 39*288
pence as the par value of his silver dollar. Even if his dollar be of the Mintissue weight, he should not expect to get quite this amount, as the risk, trouble,
and profit of the money changer must be considered. If the money changercould see his way to buy the traveller's silver dollars at the proportion of 20*06
parts of silver for 1 of gold, and could freely dispose of them in America at the
proportion of 16 of silver to 1 of gold, he could make a profit of 25 37 per cent.,
less the expenses attending the carriage and disposal of them on the other side
of the Atlantic.
Our traveller proceeds to India, taking with him some gold and silver dollars,
sovereigns and shillings. On arriving at Bombay he is desirous of exchangingsome of his money for the metal currency of India. He consults the tables andfinds that silver is unlimited legal tender, and that the Mints are open to theunlimited reception of silver from the public, in India. Against the silver rupeein my table he finds the value of one grain of fine silver to be 1*16363 pie ; hemultiplies 371*2514 grains of fine silver in the dollar, and 80*72937 grains of
fine silver in the shilling, and gets respectively 432 pies, or Rs.2. 4a., as the
value of one dollar, and 5 annas 10J pie as the value of the shilling—these are
the par values in India of the dollar and shilling. He will learn that the Mintcharge for coinage is 2-^ per cent. ; he must therefore expect to get at least
2-rV Per ceQk less than the par value, even if the dollar and the shilling should
be of Mint issue weight. He desires to convert some of his gold dollars andpounds into Indian money also. On reference to the gold table he finds that
gold is not unlimited legal tender, and that the mints are not open to theunlimited reception of it. He will, therefore, have to sell his gold at the
market value, which he finds to be Rs.21. 8a. lp. per tola, or 172| grains of fine
gold. He must find the proportion established between gold and silver by this
quotation. To do this he divides 4,129 pies, which make Rs 21. 8a. lp. by1*16363 pie, the fixed value of one grain of fine silver, and gets 3548*3 grains of
fine silver ; this divided by 172*5 grains of fine gold gives 20*34 parts of silver
to one part of gold. The Indian value of one grain of fine silver beingmultiplied by 20*34 gives the silver value of one grain of fine gold as 23*668
pies ; 113*0016 grains of fine gold in the sovereign, and 23*22 grains of
fine gold in the dollar being multiplied by 23*668 pies respectively gives
10 Norman*s Single Grain System.
Its.13. 14a. lOp. as the par value of the sovereign, and Rs.2. 13a. 9p. as the parvalue of the dollar, provided they are both of mint issue weight, and these areabout the prices he should get for these coins.
Our traveller next proceeds to Shanghae, in China, and desires to exchangesome of his gold and silver coins for the money of the country. He finds onreference to my tables that silver is unlimited legal tender, but that there is nomint in China. He learns, however, that it is the practice to stamp lumps ofsilver with the weight and fineness by authority, and that these lumps, as wellas dollars, are unlimited legal tender. He desires to exchange some of his
silver coins for China money, and on turning to my silver table he finds thatthe value of one grain of fine silver at Shanghae is 1*9665 cash; he, therefore,
multiplies the 371*2514 grains of fine silver in the dollar, the 80*7297 grains of
fine silver in the shilling, and the 165 grains of fine silver in the rupee, by1*9665 respectively, and gets 730*065 cash for a dollar, 158*764 cash for ashilling, and 324*47 cash for a rupee. These are the par values provided thecoins are of mint issue weight, and are about the values the coins would sell
for in Shanghae. He desires to exchange some of his gold coins, and finds
that he must sell them at their market value. The price of gold for the dayis 22 taels 639 cash for 566 grains troy. The proportion established betweengold and silver by this quotation is ascertained by dividing 22 taels 639 cash by1*9665, the value of one grain of fine silver ; this gives 11512*4 grains of silver,
which divided by the weight of gold, 566 grains, gives a proportion of 20*34
parts of silver to 1 of gold. 1*9665 multiplied by 20*34 gives 40, which is thesilver value in cash for one grain of fine gold. 113*0016 grains, 23*22 grains
and 11 grains being multiplied by 40 cash, gives respectively 4 taels 520 cashas the value of a sovereign, 928 cash as the value of a dollar, 440 cash as thevalue of a rupee. These are the par values provided the coins are of mint issue
weight, and should be about the China money obtained for them.Our traveller now returns to the United States of America, and lands at San
Francisco. He finds that he can there pass his United States silver dollars
upon an equality with United States gold dollars, the legal tender proportion
in the States being 16 parts of silver to 1 part of gold, though in England hehad to sell them at the proportion of 20*06 parts of silver to 1 of gold. Hedesires to exchange his sovereigns and gold rupees into dollars. Finding by mygold table that the value of one grain of fine gold in America is 4*3066 cents,
he multiplies 113*0016 grains of fine gold and 11 grains of fine gold by 4*3066
respectively, and gets $4*866^ as the value of the sovereign and 47*37 cents as
the value of the gold rupee. The coinage charge is one-fifth of 1 per cent. , so
that these gold coins should command about the values we have worked out,
provided they are of mint issue weight. To convert his silver, consisting of
some lumps from Shanghae stamped with the quantity of fine silver in them, his
silver rupees and shillings, he must ascertain the rate the mints will buy silver
at. This is the London price of the day, the Bland Bill providing that not
more than $4,000,000 and not less than §2,000,000 should thus be purchased bythe mints per month. I presume the market rate is judiciously adjusted to the
Mint purchasing rate. We will say that the market rate is in the proportion
of 20*06 parts of silver to 1 part of gold, the value of one grain of gold being4*3066 cents in the States, 20*06 divided into 4*3066 gives -214685 of a cent as
the gold value of one grain of fine silver. Say the weight of the Shanghaelump is 20 ounces of fine silver, the rupee of 165 grains of fine silver, and the
shilling of 80*72937 grains of fine silver, being multiplied respectively by214685, give $20*61 for the Shanghae lump, 35*42 cents for the rupee, and17*33 cents for the shilling, provided the coins are of mint issue weight. Theserates are about the prices which would be obtained if the proportion of silver
to gold is 20*06 of the former to 1 of the latter.
I have taken you through two gold and two silver standard countries. Youcan now, if you please, go through all the other countries of the world,exchanging the gold and silver moneys of all countries in each, as you proceed,
with the assistance of my tables.
Two German books, one by Noback, of 1 ,234 pages, published in 1879, contains
the gross and fine weights in grammes of 637 gold and 1,462 silver coins,
Norman*s Single Grain System. 11
together 2,089 coins of the world ; the other of 114 pages, published in a choapform in Bremerhaven in 1875, contains the fac-similos of 426 gold and 824
silver coins, together 1,250 coins, of which there are for Europe 316 gold and663 silver, for Asia 22 gold and 37 silver, for Africa 5 gold and 1 silver, for
America 79 gold and 116 silver, and for Australia 2 gold.
I can imagine that not a few readers of this article may say, " What is the
use of all this botheration with decimals, long calculations and minutias of
grains of fine metal ? If I am going into a country or going to do business
with a country I learn about its coinage in a short way, I do not want to be
troubled with all this stuff.'' I reply that I have an end in view. I knowthe mode by which my own mind has found its way through the difficulties out
of which no books that I know helped me, and I expect that my present
experience may possibly be helpful to other students. If you would havereasonable opinions upon mono-metallism, bi-metallism, tri-metallism, alter-
native metallism, or no metallism, you must understand the foundations of
metallism. If you cannot master, or care not to master, the system which I
advocate, and which appears to be the very essence of metal currency, wouldit not be only prudently cautious to express ignorance of the subject ? But if
you can master them, is it not your duty to do so ? seeing that every member of
a civilised community is interested in the question of sound currency, and that
all who can exercise any influence in the State may be called upon to express
an opinion upon the matter.
I can name 103 countries in the world—and there are more—the prices in
which are based upon gold and silver. Some of these countries have the sameweights of money of account and coins but different denominations. If weconfine the number of moneys of account or coins on which the exchanges of
the world aro at present regulated to 12 gold and 13 silver, 25 coins or moneysof account in all, then the 2,089 coins of which Noback gives the weights in
grammes present 52,225 different values in the 103 countries of the world, all
of which can be ascertained by the possession of Noback' s book and my tables
of values of one grain or gramme of fine gold and one grain or gramme of fine
silver in the various countries of the world.
Standard Currency.
It is, in my opinion, absolutely necessary that an automatic standard currencyfor a country should be embodied in a substance having a correlative value to
that for which it exchanges. This substance must have a cost value and a sale
value, and be subject to the laws of supply and demand, just as other substancesare which are produced under similar circumstances. * The errors and miseriesresulting from the frequent over-issue of inconvertible paper money are due tothe disregard of this truth. A currency standard cannot at the same time beboth physical and metaphysical, real and ideal. It is due to the effort whichhas been made to combine these two that false opinions of currency are formedand the mind is led away into maze and mystery. Let it become firmlyestablished that the basis of a sound automatic currency must be laid of asubstance of correlative value with other substances, and through imperfectionsubject to variation in value in consequence of being produced and distributed
under the laws of supply and demand ; that all other instruments used inexchange are tokens of this substance ; that the substance is constituted astandard by legal enactment based upon human needs ; that these enactmentsprovide for the unlimited reception of the substance and the fitting of it for
currency by the State, and the appointment of that currency as unlimited legaltender ; and we could never hear of such wild proposals as are current in the
* I have treated of these subjects in the columns of the London Chamber of CommerceJournal under the heads of "Function of Gold and Silver Currency in the Internal andInternational Transactions of Countries—International Indebtedness and Simplification ofExchange," July, August, September, October, November, December, 1883, March, May,1884 ;
" Production of Gold and Silver in the United States of America," January, March',1885; " The Comparative Cost of the Production of Gold and Silver and the ComparativeYield of Grains of Gold and Silver per Ton of Ore," June, July, August, SeptemberDecember, 1886, February, May, July, 1886, May, 1887.
12 Norman*8 Single Grain System.
United States of America, one of which is that the soundest and safest standardcurrency is notes composed of greenbacks.
Single Grain System, for finding the Weight of Fine Metal indicatedby Relative Prices, and Mastering the Exchanges.
Relative prices and values in different civilised countries which are not underthe slavery of inconvertible paper currencies, are the comparative weights offine gold for fine gold, fine silver for fine silver, fine gold for fine silver, or fine
silver for fine gold. Rates of exchange would also come under the samedefinition. My single grain system provides divisors for each country whichresolve the weights of fine metal indicated by values, prices, and rates of
exchange. Also multipliers, which yield in each country the values of theweights of metals in the moneys of account and the gold and silver coins in theworld.
If I am credited with any knowledge of the principles of currency, ormastery of the exchanges, I am happy to explain that it is altogether due to
possessing a firm hold on a few common sense axioms with regard to the first
and the use of the single grain system applied to the second. I would assureevery one that he can easily possess all the information which 1 have acquired.
He may take different views of the principles of currency. But if he desires
to be at home on the foundation of the exchanges and the international valuesof the world's moneys of account and gold and silver coins, he will find mysystem, which is contained in the tables and rules given herewith, all that is
requisite to enable him to accomplish it. I am astonished that this single
grain system has not been discovered and generally acted upon ages ago, for it
has a simplicity, beauty and power which I feel confident will cause it to
become of great general benefit to the world.I trust that as each reader understands and appreciates this system he will
do his utmost to extend the circulation of it, and assist others to understand it.
A good test of the knowledge of it consists in determining the monies of
account meant by the three quotations of exchange under the head of Americanmarkets in the daily newspapers, and the weights of fine metal in the six
quantities indicated by the three quotations.
I would that some millions of the more thoughtful of the inhabitants of theworld could possess this table and rules at once.
All youths should work this system, and their elders of both sexes shouldunderstand it.
-Waterlow and Sons Limited, Printers, London Wall.—
Reprinted from the 1 jOndon Chamber of Comi
^encross's Table of Denoiof the Wobld ;
ixample shows the use of 1
In the left hand column fin
equivalent, viz. 5.
men Journal
TAI
for October, 1888,
Mr. Kenric B. Mi
Mb. Alexander L. Gj
The following t
Argentine Republic.
be found the requirec
GOLD PAR
MNATIONAL EXPRESSIONS FOR EqUTVon Noback's Weights, given by Mb
ihe table :—Q. How many francs ai
i franc. Then at the point where tl
I ( 1
En
o13
E S
Florin.
I
o-a
6m 1
Milreis.
wo f
iiItggM
d1
om8
to1
«3
OQ
13
25-22
20-43
10 09
19-85
6-103
9-70
18-16
4-504
8-91
4-867
4-95
5-044
5-334
4-69
5-044
5-215
6-125
4-8
4-948
4*89
2-124
10-273
41-68
97-69
110-71
0-0395
0-81
0-40
0-479
242
0-385
0-72
0-179
0-3533
0-1929
0-1962
0-2
0-212
0-186
0.2
0-207
0-203
0-19O3
0-1962
0-194
0-O843
0-4O73
1-650
S-87
1-392
0-04E
1-24
0-494
0-592
0-299
0-475
0-888
0-225
0-436
0-238
0-242
0-247
0-262
0-23
0-247
0-255
0-251
0-235
0-242
0-239
0-104
0-503
2-04
4-782
5*423
0-099
2-500
2-03
1-198
0-605
0-962
1-800
0-447
0-883
0-4824
0-491
0-600
0-628
0-465
0-500
0-617
0-608
0-476
0-491
0-481
0-210
1-018
4-132
9-683
10-98
0-0327
2-086
1-6898
0-8344
0-5047
0-8023
1 -5021
0-3725
0-7369
0-4025
0-4092
0-4217
0-4412
0-3878
0-4172
0-4313
0-4239
0-397
0-4092
0-4037
0-1757
0-85
3-4471
8-0986
B-1571
0-164
4-133
3-35
1-653
1-98
1-59
2-975
0-738
1-46
0-7999
0-8106
0-8266
0-874
0-7683
827
0-855
0-839
0-7861
0-817
0-800
0-3481
1-6S3
6-829
16-00
18 15
0-103
2-600
2-106
1-04
1-246
0-629
1-872
0-4643
0*919
0-5017
0-51
0-52
0-55
0-4834
0*62
0*538
0-5283
0-4949
0-5109
0-603
0/219
1-06
4-26
10-071
11-42
0-0551
1-3889
1-125
0-5556
0-6658
0-3361
0-5341
0-2181
0-4905
0-268
0-2724
0-2778
0-2937
0-2582
0-2777
0'2s71
0-2822
0-2641
0-2726
0-2688
0-117
0-6657
2-29
5-38
6-1003
0-222
5-5997
4-5357
2-2399
2-6843
1-3551
2-1538
4-0317
1-9712
1-080
1-0984
1-12
1-1317
1-0411
112
1-1578
1-1377
1-0658
1-0986
1 -0838
0-4717
2-2808
9 2539
21689
21-595
0-112C
2-8306
2-2926
1 -1322
1 -3569
0.6849
1-0887
2-038
0-5055
0-5461
0-5552
0-5661
0-5986
0-5262
0-5661
0-6853
0-5752
0-5388
-5553
0*5478
0-2394
1163
4-6408
10-964
12-4375
0-2066
5-1826
4-1978
2-074
2-4815
1-264
1-993
3-7319
0-9256
1-831
1-0165
1 -0366
1-0961
0-9636 •
1-0366 :
1-076 '
1-0539 : 3
0-9861 < 3
1-0168 : 3
1-003 <
0-4366 <3
2-1109 :i
8-6616 II
20-074 K :
22-763 K!
1
ov ^Franc
Florin, A. H
„ B
Dollar, TJ. S A
s< „ A. R
,, Ecua
„ P.I
Yen
Toman
i> Egypt
N.B. 700,000,000 peop] e of t tie ea rthef) ect th eir inl ernati anal interch anges CD Hlv
HI.
7 kind permission of Mr. Alexander L. Glencroas and the Secretary of the Chamber1
i , F.E.G.S., F.S.S.)
JIYALENTS.
Weights of Fine Gold on Issue of the Coins from the Mints in 47 Countries
Henry Norman, in this Journal for July 5th, 1886.
al to, at par, one dollar, Argentine Republic? A. In the top column find dollar
ical and horizontal columns, respectively, of these two denominations intersect will
Dollar.
3«
0-1982
5-0000
4-05
1-999
2-392
121
1-9229
3-6000
0-8928
1 -7663
0-9615
-9807
1-0574
-9295
0-9999
1-0338
1-016
0-9516
-9S09
0-9677
0-4211
2-04
8 -2623
19-366
21 -9598
0-1875
4-7284
3 '9603
1 -8918
2-2667
1-1442
1-8186
3-4045
0-8414
1-6704
0-9124
0-9275
0-9458
0-8971
0-9457
0-9777
0-9603
0-9
-9277
0-9152
0-3983
1-926
7-14
18-315
20-7685
0-2133
5-3785
4-3566
2-1514
2-578!
1-3015
2-0686
3-8725
0-9605
1 -9001
1 -0378
1-055
1-0578
1-1375
1 -0767
1-1121
1 0929
1 -0203
1 -0562
1-041
0-4528
2-1907
8-88S3
20-8332
23-6237
0-1982
5-0000
4-05
2-00
2-3969
1 -2099
1-923
3-600
-8929
1-7856
0-9648
0-9308
1-00006
1 '0574
0-9296
10338
1 -0114
0-9517
0-9809
0-9677
0-4209
2-0385
8 -2623
19 -367
21-9611
0-1917
4-8363
3 -9174
1 -9315
2-3185
1 -1703
1-8601
3-4822
0-8637
1 -7086
0-9332
-9487
0-9673
1-0223
-8992
-9673
gtf
0-9600
0-9205
0-9488
0-9361
0-4074
1 -9700
7 -992S
18 7331
21-2424
0-1951
4-9214
3-9863
1 -9686
2 -3592
1 -1909
1 -8928
3 -5434
-8788
1 -7386
-9496
0-9653
0-9343
1 -0408
0-9510
0-9S43
1-0130
0-9367
0-9655
0-9525
0-4145
2 -0045
8'1329
19-0625
21 -6158
0-2083
5-2540
4-2557
2-1016
2-6187
1-2714
2-0207
3-7827
-9382
1-8561
1-0137
1 -0305
1-0508
1-1111
-9768
1 -0508
1-0864
1-0676
.a .-
ft T3ft PIH OS
P4M
1-0308
1 -0165
0-4135
2-1400
8-6325
20-394
23-076)
-2029
5-0971
4-1287
2-0383
2-4435
1-2335
1 -9605
3 -6700
0-9143
1-8007
0-9835
1 -0195
1-0780
0-9477
1-0194
1 -0503
1-0357
0-9701
0-2048 0-4707
0-9865
0-4293
2 -07 60
8-4231
19-7431
22 -388
5-1667
4-1860
2 -0667
2 -4768
1*2503
1 -9871
3-720
0-922
1-8253
-9269
1-0134
1-033)
1 -0927
0-9606
1-0333
1-0683
1-0496
0-9834
1-0136
0-4352
2 -1044
8 -5383
20-069
22 -6932
11 -8720
9 6161
4-7488
5-6912
2-8728
4-6661
8 -6477
2-1201
4-1942
2-2908
2-3287
2 -3745
2-5107
2 -2073
2-3744
2-4548
2-4123
2-2979
2-3291
2*2978
0-0974
2-4552
1 '9887
Piastre.
0-024
o-eosi
0-4901
0-93210-2425
4-8356
19-619
45*9933
52-144
1 -1874
0-5911
-9443
1 -7677
0-4000
0-8671
0-4737
0-4816
0-4911
0-619!
0-4564
0-4809
0-6077
-4989
0-4673
"4817
-4762
-2063
4-0573
9-61C0
10-7835
O-290O
0-1464
0-232 1-,
0-4357
0-1081
)-2138
0-1167
0-1187
0-1210
0-1279
0-1125
0-1210
0-1251
0-1229
0-1152
0-11S9
0-1171
0-0509
-2465
0-01025
0-2682
-2091
-1033
-1248
0T624
0-0977
0-1859
0461
0-0913
0-0198
0-05C6
0-0516
0646
0-04S0
-0616
0-0534
0-0525
0-0491
0-0107
0-0499
-0217
0-1062
0-4266
2-3439
2-6578
-0090
0-2277
0-1844
0-0910
0-1091
-0651
0-0676
1) -1639
0-0407
0-0804
0439
0-0446
0-0456
0-0481
0-0423
0-0455
0-0471
-0463
-0433
0-0447
0-0447
• -0192
0-0927
0-3762
0-8819
1131
ices. .Among these people gold forms no part of the monetary circulation.
INDEX. 193
INDEX TO CONTENTS.
FAGRAdit level 46Alice Bullion at the ironmonger's........ 88Alice Bullion's definition of "Value and Price" 94
,, ,, commission 103Alloy 18Alluvial soil 37Amalgamation, Gold 50
,, Silver 53Amount of alloy allowed ......... 68Ancient coins stamped with seals . 14Answers to examination questions . .117Areometer, Baume's 67Arrival at New York 62Assayer, Duties of ... 64Assay Office and its surroundings 63
Balloon, Dinner in the . . .31Balloon starts, The .... 52
,, trip, Mr. Bullion and John Smith's ...... 26,, Up in a 27
Barometer, Price of 91Bars, Gold 76Bars or spikes 14
Bars per mil fine, Gold 69
,, n »> Silver 71Bars rolled and annealed, Gold ........ 76
,, Silver 76Barter and price illustrated ......... 95Barter, Monetary system not affected by 96Bill at Coffee-house 91Bills, Hat and coal ... 93Bill, Tailor's 93Blanks annealed and washed . .77Blanks, Making 77
„ Treatment of silver 77Bohemia, Gold washing in 49Brass and pewter 17Brazil, Gold washing in 49British coins, Value of all the 85British money coined at Melbourne and Sydney 80
13
194 INDEX.
PageBritish sovereign........... 83
Bullion, Gold 59
Bullion, Gold and silver melted . . ..... ^5
Bullion's definition of "Value and Price," Mr 95
Bullion's family, Mr. 81
Bullion, Silver ........... 59
Burdon's gold ore pulverizer and amalgamator . . . . .51Buttons refined, Gold 67
Capital, chattel and cattle, Origin of 11
Cattle 11
Cattle not indestructible 20
Coffee-house luncheon . . \ 89
Coinage, Bronze for . . . . . . . . . .71„ Gold for 71
,, Silver for 71
Coins . 12
,, Divisibility of 18
,, Indestructibility of 20
,, Intrinsic value of. 24
,, ,, ,, standard. ....... 25
,, ,, ,, token 24
„ Light 64
,, On the value of .......... 8
„ Perfect 79
,, Portability of 18
,, Stamping the .......... 78
,, Weighing the 78
Commercial dealings between India and England..... 102
Comparative weights of standard metal seen at a glance . . .109Conditions of standard metal moDey . ... 86
Consol, Mr 75
Cookery, Some more 55
Copper 16
,, mines 44
Corn 13
Cornish mining rules .29Cost value 9o
Countries in which gold and silver are found 42
Cradle rocking 49
Crown pieces, James II. 's pewter 17
Crushing, stamping, and grinding mills 47
Cupellation ............ 66
Cupellation of gold samples 66
Cupels ............ 66
Currency .... ... . .... 21
Cutting room 77
Definition of money, John Smith's 7
,, „ ,, Miss Sweet's 8
Deno'minational expression for a grain of gold in a gold standardcountry 83
Denominational expression for a grain of silver in India . .97Denominational expressions of British coins, with their real and repre-
sentative weights in fine gold 85
Description of gold and silver mining in quartz rocks . . , . 4GDifferent kinds of metals used ........ 14
Difficulty of establishing a fair system of exchange . . . .10
INDEX. J 95
PageDore gold , 59Drawback, that the value of metal is fluctuating 21Dressing floors 47
Education of a miner, On the 26Eliquation ............ 68Emigrants' landing station, New York 68Kxamination questions . . .. . . . ... .116Exchange on Berlin . . . . . . . . . .111
,, ,, London .......... 110
,, „ Paris 112Exchange or barter .......... 9
,, value ........... 96Explanation of technical terms . . . . . . . .21
Fee, Origin of 11
Fifth Avenue Hotel and its surroundings . . . . . .62Fillets brought to right thickness........ 76
Finding of metals . . . . . . . . . . .36Flux 69Foreign exchanges . . . . . . . . . . .109Formation of rock . . . . . . . . . . .31
,, ,, strata .......... 32
Fragmentary deposits, Gold found in ....... 37Furs .11
,, not indestructible ......... 20Further treatment of silver ......... 54
Geology 25Gold and tin unaffected by water or air . 41
,, dust 14
,, made up into ingots ......... 51
,, more valuable than silver . 20
,, not always native.......... 37,, samples tested .......... 66,, the only metal always found in a metallic state . . . .40,, washing ........... 48
Government v. Private refiners . . . . . . . . 59Granite ............. 35Great Pyramid of Egypt . . .86Grocer, The . 89Grocery, List of . . . . . . . . . .91(tun money. James II.'s . . . . . . . . . .17
Home again ............ 89How to bring the powdered ore into continual contact with mercury . 73II ow to maintain the quickness of the mercury . . . . .73Hungary and Bohemia, Gold washing in ...... 49Hydrogen-Amalgam process, The 72
Igneous and aqueous rocks ......... 32Imperfections picked out 79Increased quantity of gold extracted 741 ngottsville, John Smith's visit to . ....... 81Intrinsic value ........... 20Invented about 900 B.C., Coins .14
196 INDEX.
PageInventor of Hydrogen-Amalgam process 72
n >> weighing machine 79Ironmongery, List of 90Iron money 16
John Smith's definition of "Value and Price" .... 95
,, ,, commission 107
ii ,, gives the exchange value of British coins . ... 8
Land rising 34
,, subsiding 34Lead money . 15Leather money . 12Legal tender 22Limestone 33Loss of gold 73
Maohinery, &c 26Machines at work, Hydrogen-Amalgam 74Manchester, Visit to 87Marking machines........... 77Melting department, The .75Metamorphic rocks 35Metal easily divided and sub-divided 21
Metal points , 103Metals hidden in earthy or mineral ore 40Metals in use now .18Mineralogy and chemistry 25Miners' tricks 43Mining companies 28
,, contracts . . . . . . . . . . .30,, John Smith's ideas of 28
„ officers . .30Mint, A visit to the 76Mono-metallists and bi-metallists 23Monetary system does not affect principles of barter . . . .96Money of account 83
Nickel 17
Norman's single grain system 83Norman's single grain standard of measure 87
Order of strata always the same 34
Ordinary methods of working foreign exchanges 109
Origin of metal money .......... 13
Origin of mountains 33
Ornaments ............ 12
Oxidise, To 54
Palace Hotel, San Francisco 46
Paper money . . . . . . . • • • .24,, ,, Intrinsic value of 24
Pattinson's process 56
Perfect coins"9
Platinum . 17
Pony's feed 92
INDEX. 197
PagePress room 78Price of a British sovereign in India 99Price of a grain of gold in a silver standard country . . . .99Price of a grain of silver in a gold standard country . . . .98Primitive forms of metal money 14Professor Piazzi Smyth and Major Tracey, R.A 86Proportion established between gold and silver in a gold standard
country 100Proportion established between silver and gold in a silver standard
country 101Proposed practical lessons 82Proposed trip to New York 62Pyx, Trial of the 79
Quarters, Mr. Bullion and John Smith's 45Quartz 36Quartz rocks, Gold and silver mining in 46Queen's chamber, Standard of measure 86
Refining 58Refractory ores cause mercury to sicken. . . . . .72Rent of ground 29Report of examination .124
,, on commissions 108Representative money . 23Ring money . 15Rough lumps 14Route from California to New York . 60
,, ,, Land's End to Panama 27
,, „ Panama to California 45
Separating gold from the amalgam 51
Separation of gold and silver. ........ 68Series of conversations, This leads to a 9
Shopping in Manchester 83Silver bars 76Silver bars per mil fine 71Silver for coinage 71
Silver island 60Silver ores 53Single grain system—Comparative weights seen at a glance . . . 109Sinking shafts 46Sixty days' sight 112Small cost of treatment by this process 74Smelting ............ 53Soil in which the precious metals are found .... . 28Specific gravity of liquids . . . . . . . . .37
,, ,, solids *. .39Standard money . . - . . 22Success of our present system due to certain points . . . .18Sulphurets ............ 50Supply and demand .96Systems sometimes missing .34
Tailor, The 88
Tin 16
198 IXDEX.
PageTin mines 44
,, money 16
, , never found native 44
,, used in coinage 71Tizzy, Mr 615
Tizzy's invitation, Mr 62Tobacco 13
Token money 23Treatment of gold granulations ........ 68
,, powdered ores 48
,, silver granulations 69Tribute work 29Tut work 29Twenty-third street, New York ........ 67
Unit of value 82TJnstratified and stratified rocks . .32Use of reservoirs 48
,, single grain system 93
Value and price ........... 94Value in English money of foreign moneys of account . . . .94Value of coins, On the .......... 8
,, money, On the ........ 9
Various uses of gold and silver ........ 64
Vegetable productions, Other . 13
Veins and lodes 36Verdigris at the mining district, Mr . 4o
,, Good-bye to Mr • 71
Volcanic eruptions . ........ 35
Weighing the coins
Weight of gold ingots .
What is money ?
Will's commission ....,
, definition of value and price
,, manner of reckoning corrected
78
75
7
10594
92
For Contents of Appendix, see pages 127 to 130.
WATERLOW AND SONS LIMITED, PRINTERS, LONDON WALL, LONDON.
I
<2
To be pasted into "COIN OF THE REALM: What Is II?"
and to be digested by the Reader.
THE EXCHANGES
UPON A SCIENTIFIC BASIS;
ALSO
THE MODES OF EFFECTING EXCHANGES.
BY
JOHN HENRY NORMAN.
Reprinted from "Bankers' Magazine" for February, 18S9.
PRICE ONE PENNY.
LONDON:WATERLOW & SONS LIMITED, PRINTERS, LONDON WALL.
188 9.
THE EXCHANGES
UrON A SCIENTIFIC BASIS, &C
Tens of thousands of persons throughout the world who are
in the habit of working colonial and foreign exchanges never
think of definite weights of standard gold or silver indicated
by the denominational expressions with which they are
working. Even the chain rule, which is so widely used in
effecting arbitrations of exchanges, to a large extent embraoes
denominational expressions for weights of gold and silver
instead of the weights themselves. These rules and examplesare fouud ready to hand, and the mind goes no further than
the mechanical work to reach the correct answer. If this is
the practice of merchants, bankers and exchange dealers, is
there any cause for surprise that rulers, statesmen, legislators,
scientists and political economists fail of having " a masterly
skill in bullion and coin," and are as rudderless ships at sea in" delicate emergencies," and when most important monetaryproblems have to be nationally discussed and settled ?
Trade in countries, and between countries possessing effective
standards of gold or silver, the denominational expressions
for weights of which are prices and rates of exchange,
is carried on in precisely the same way as when Abrahamweighed his silver out in payment for his burial cave.
!Kor ihe effigy certifying the weight of fine metal in the
standard coin ensures that weight counted out in coin as
though the metal were weighed out. The receipt of anyrecognised token of the standard metal is as effective a discharge
of debt as though the standard metal were weighed out for it.
This paper will show the force of metal prices and exchanges
between countries possessing effective metal standards.
The working of exchanges upon denominational expressions
for weights has introduced confusion which even practical
exchangers are occasionally entangled in. This is manifest in
calling a rise a fall and a fall a rise, a premium a discount,
and a discount a premium in exchange. For instance, in the
exchange between the British Isles and India compare Is. 10 1</.
with Is. 4^/. per rupee. In the British Isles we should say
the exchange with India has fallen 6<t. per rupee, and it wouldbe right. Because in the one case 10*0 grains of fine gold are
given for 165 grains of line silver, and in the other 7 -8 grains
of fine gold are given for 165 grains of fine silver. But in
India, speaking of the difference between the same rates, the
rate would be said to have fallen, which is wrong. Because in
the one case 165 grains of fine silver would command 10*6
grains of fine gold, and in the other 165 grains of fine silver
would command only 7*8 grains of fine gold ; showing that the
Indian rate had risen in consequence of the same weight of
silver commanding a less weight of gold. There never could
have been any confusion if a more scientific system had beenfollowed. We see in the present method of quotations of
exchanges that between two oountries, say, for instance, the
British Isles and India, one expression is invariably a constant,
in this case the rupee. The quotation both in the British Isles
and in India is more or less pence per rupee.* The following
suggestion is made as defining a scientific method and one free
from obscurity and not leading to confusion. The variable
expression or weight in the country originating the transaction
for the constant expression or weight in the country with which the
comparison is made or upon which the hill is drawn.Of the quotations of the British Isles on other countries, and
of other countries on the British Isles, the sixteen following are
specimens of those in use. The countries having at present
inconvertible paper currencies are treated as if they possessed
effective metal standards.
TABLE I.
fg—Grains of Fine Gold. fs—Grains of Fine Silver.
France .
British Isles on. On British Isles.
Francs / 25-22 or 113-0016 / 25-22 or 113-0016 fg for
fg for £1 or 113 0016 fo. £1 or 1130 »16 fg.Germany Marks m 20-43 or 113-0016 m 20 43 or 113-0016 fg for
fg for £1 or 113-0016 fg. £1 or 113-0016 fg.Russia
.
Pence d 2621 or 12-34 fg d 26-21 or 12-34 fo for 1
for 1 rouble or 277 7224 fs. rouble or 277*7224 fs.
Austria-Hungary Florins/14-83 or 2542-54 fsfor £1.
/ 14-83 or 2542-54 fs for £1.
India . Pence d 15-56 or 7-33 fg for d 15-56 or 7'33 fg for 1 rupee1 rupee 165 rs. or 165 fs.
United States of Dollar $ 4-86 or 113-0016 fg $ 4-86 or 113 0016 per £1.America . per £.
Chili . Pence d 32-87 or 15-48 fg d 32-87 or 15-48 fg per pesoper peso or 3l7 -228 fs. or 347-228 fs.
Argentine Republic Pence d 4916 or 23-118 fg ^49-16 or 23 148 fg per pesoper peso or 23-148 fg. or 23-148 fg.
•Additional confus-i n in this instance arises from the statement that the par of exchangewith In lia was 2* per rupee. This was not so For 2*. per rupee is the equivalent of64-58 pence per s andard ounce ot silrer.and between this present time and lf-33 ihe highestyearly average
Irice was 62^ pence in 1859. Under this term 'It., the one-tenth of a
pound, or 11 •30000 graius of fine gold has beon lost sight of.
There is no system in these. If yon start with the idea
that between the British Isles and silver standard countries
the quotations will be pence for the moneys of account of these
countries, you find the conditions with Russia and Austria-
Hungary, both professedly silver standard countries, throw
you out, with Russia penoe per rouble, with Austria-Hungaryflorins per £1. Again Chili, with a professedly silver standard,
and the Argentine Republic, with a professedly gold standard,
both are quoted pence per their moneys of account. Ascientific system of quotations of exchanges would be the
following for the sixteen quotations of the eight countries
named as examples for the whole.
TABLE II.
fg—Grains of Fine Gold. fs—Grains of Fine Silver.
France
British Isles on. On British Isles.
Pence d 9-51 or 4-48 fg per Francs/2522 or 113-0016 fgfranc or 4 -48 fg.
|
per £1 or 113-0016 fg.
Germany Pence d 11-75 or 5-5313 fg Marks m 20-43 or 113 0016per mark or 5-5313 fg. fg per £1.
Russia
.
Pence d 26-21 or 12-34 fg Rouble r 9-15 or 2542-53 fs
per rouble or 277-7224 fs. per £1.Austria-Hungary Pence d 16-18 or 7-62 fg per Florin/ 14-83 or 2542-53 fs
florin or 171*470 fs. per £1.India . Pence d 15- 66 or 7 -33 FGper Rupee r 154-09 or 2542-53 fs
rupee or 165- fs. per £1.United States of Pence d 4931 or 23*22 fg Dollar % 4866 or 113-0016America . per dollar or 23-22 fg. fg per £ I
.
Chili . Pence d 32-8/ or 15-48 fg Peso p 7-3o or 2542*53 fs
per peso or 347*228 fs. per£l.ArgentineRepublic Pence d 49*16 or 23*148 fg Pesojo 4-881 or 1130016 fg
per peso or 23*148 fg. per £1.
Since it is not to be expected that there will be any alteration
in quoting and working the exchanges of the world, it mightserve to keep the mind free from error to be careful whenquoting a rate to put the ooin of the country originating the
transaction first in the formula. Thus in India, instead of
quoting pence per rupee, quote rupee per pence. If a rupee,or 165 grains of fine silver, is given for a less number of penceor a smaller weight of gold, the exchange in India on theBritish Isles has risen. If fewer pence are given in theBritish Isles for a rupee, the exchange in the British Isles onIndia has fallen.
With regard to the efEect of the exchanges, let it bethoroughly grasped that every grain of wheat and oil seed,
eaoh hank of jute and skein of silk, every pound of indigo andounce of tea which come from India and are used in the
British Isles, have silver and gold as good as weighed out
against their weights more than once between the production
and consumption of these commodities. Follow a spoonful
of tea, with which you are about to make your afternoon oupof this refreshing beverage. The planter, who is a friend of
yours, has sent it to you from his factory in Assam. He has
paid silver against it to the labourer for his work and for other
necessaries in Assam. He has sent it to his agent in Londonfor transmission to you. You do not know either the cost
price or the sale price of the tea, and you can only tell yourfriend who likes it, and desires to know its price, that youthink it better than some you recently bought at a first-class
shop at 2s. 6d. per lb. Suppose that you have bought that
spoonful of tea, and the tea planter has dealt with it in the
ordinary commercial manner. He would send the tea to his
agent at the seaport, with instructions to sell it there. Thebuyer would pay silver for it, having ascertained upon whatterms silver in India could be exchanged for gold in the
British Isles. He sends the tea to London, and sells it at
auction in the Mincing Lane tea market to a tea dealer,
the buyer paying gold for it. At length it comes into yourpossession, you having paid gold for the same. The tea mighthave passed through more hands than those mentioned before
it came into yours, both in India and in the British Isles, butthe possessor of it each time practically weighed out either
silver or gold for it. It should be particularly noticed that
the purchaser in India first ascertained at what rate he could
exchange silver for gold, before he parted with his silver for
the tea. It may be asked why he did this ? he had parted
with his silver and got the tea instead : he would have nothing
more to do with silver in the transaction. True. But he has
bought the tea for the purpose of selling it for gold in the
British Isles. Assume that your spoonful of tea is part of
one pound, which has cost you 2s. 6d. per lb., of which 6d. wasfor duty. Assume that the purohaser of the tea in India has
to do with the remaining 2s. We have to account for his
anxiety to know at what rate he could exchange silver for
gold before he purchased the tea. Say that his position in
India was 10 lbs. of tea for 10'96 rupees, or 1,808 grains of fine
silver. He is going to sell the tea lor gold in the British Isles,
and he must ascertain how much fine gold embodied in poundssterling are equal to 1,808 grains of fine silver. He finds that
the rate of exchange is 2L88 pence per rupee, or 10*3 1 grains
of fine gold for 165 grains of fine silver; so that his 10*96
6
rupees are worth £1, or 113-0016 grains of fine gold. Onthis exchange, by selling to you one pound of the tea at 2s.
per lb. he makes nothing. But assume that exchange has
altered in India, and has become 15'56 pence per rupee, or
105 grains of fine silver for 733 grains of fine gold, whilst
the price of the tea in India has remained the same, viz., 1,808
grains of fine silver, or 10*96 rupees per 10 lbs. Under these
conditions the cost price of the tea stands at 14*. 3^/., or 80 '36
grains of fine gold, and could be sold at a trifle more than
Is. 5d. per lb. The difference between Is. 6d. and 2s. is 41
per cent. It is hardly necessary to state that the competition
among producers, merchants of tea and others, would reduce
profits to the ordinary level, and the consumer would get the
immediate benefit of the reduced cost of the tea in the British
Isles.*
When we examine into the cause of the diminished gold
price of the tea, we do not find it to be the diminished cost
of production or over-production of the tea, nor the diminished
supply of gold and the consequent increased purchasing powerof that metal in the British Isles : but we trace it distinctly
and solely to the increased silver price of gold. The altered
relation of silver to gold in the proportion of 15| to 16 parte
of silver to 1 of gold in 1-H73, to 22| parts of silver to 1 of
gold now, has not been produced by the gold but by the
fart that silver can be obtained from the earth at vastly less
cost value than in the proportion which formerly existed, whensome mints of the world were open to the unlimited reception
of that metal at a fixed relation of \h\ to 16 parts of silver to
1 part of gold. All the time these mints were open on these
terms, the market price of silver was bound to be at the samerelation, and marvellous profits were assured to silver miners.
Modes of effecting Exchanges.
The definition of a rate of exchange for business betweentwo countries which possess effeotive metal standards maymean one of three things—I. The weight of fine metal formingthe standard in one country, for a weight of fine metal form-
• The testimony of traders with India in this country confirms this. Tt is a'so a directnecenary remit upon the first principles of competition. I onsidir this collateral evidence.The (jold price of Indian Governn fnt rupee seem it 68 lias fallen 30 ]>er cent, in the BritishIsles since 1873. There has b- en no such fall in India, nor has there been a rise in theirsilver price in the least correspond Og with the rise in the silver price of gold. The causeof the decline in price in the br.tish Isles is not the damaged credit of the Indian Govern-ment, the qnaxri ty of this class of securities, nor tie diminished supply of goid but hefall in the gold price of silver. The same motive actuates both the'denlers in In inncommodities, such as cotton and wheat, anil in Indian Government seem .ties- namely,profit measured in gra ns of jrold or grains of silver. Surely the same cause equaliy affect*the gold (trices of both classes of property.
ing the standard in another country, resulting from the
transmission of the metal. The metals may be gold for gold,
silver for silver, gold for silver, or silver for gold. II. Theweight of fine metal which has to be given in one country for
a bill upon another country, which bill is a legal obligation to
pay a definite weight of fine metal in that country. III. Theweight of fine metal which could be obtained in one country bythe sale of a bill upon another country, which bill is a legal
obligation to pay a definite weight of fine metal in that
country. The limitation to the fluctuation of exchange in thethree cases would be the cost of carriage and coinage of the
metal. Assume the following, a domestic case :—A person in
London has funds in India which he desires to possess in
London. There are three methods open to him whereby hecould accomplish this—I. Order the rupees home and sell themin London. II. Have his silver invested in a bill on Londonfor gold. III. Sell his bill in London for gold for his rupeesin India. The best of the methods would depend upon whetherIndia is indebted to the British Isles, or the British Isles are
indebted to India, considered in connection with the proba-bilities of the future. The transmission of silver keeps theoperation open u^itil the sale of it, but this method is
independent of the risk of a bill of exchange being dishonoured.This mode, however, owing to the uncertainty of the gold price
of silver in the British Isles and the trouble connected withthe business, would not be thought of unless the ordinarydealers in bills of exchange declined to buy bills in Londonupon India or to sell bills in India upon London. If India is
receiving metal—her normal condition—the best mode wouldbe by sale of a bill here for the silver in India. If India is
sending silver to London, there would be little difference
between selling a bill in London on India or buying a bill in
India upon London.The normal state of the exchange between the British Isles
and India necessitating the remittance of silver to the latter
country, a closer investigation into the reasons for the rate for
a bill of exchange in London on India being for so much, maybe interesting and instructive. Take the market price of silver
in London at the proportion of 22| parts of silver to 1 of
gold, or 41*88 pence per standard ounce. The par of exchangebetween London and India at this price would be 15*56 penceper rupee. The par being 15*56 pence, why should a seller of
a bill for rupees in London get a higher price than this ?
Because the bank or dealer in bills who is desirous to remitmoney to India would have to pay 2|- per cent for coinageof his silver in India and
-fof 1 per cent, for charges on the
transmission of it, in all 3 per oent. more if he was compelled
to resort to the shipment of silver. A bill which gives himrupees in India causes him less trouble and suits him as well
in other respects. So the seller of a bill obtains Is. 4'locl. for
a rupee. But if the state of India's indebtedness to the
British Isles necessitates the shipment of silver, then upon the
the same gold price of silver the person desiring the equivalent
of his rupees in London would obtain no more than Is. 3'44rf.
because | of 1 per cent., being charges on the transmission of
the silver home, must be deducted.
The same laws would operate in connection with the
exchanges of standard metal or metals between all countries of
the world as those described in the exohange between the
British Isles and India, and the object of the latter part of this
paper is to bring them in a simple manner before yourreaders.
The world has no science of money. Not a day should belost in preparing a science primer of money. I would that I
could assist to stimulate the scientific men whose vision is not
distorted by credit instruments, who possess an aptitude for the
subject and could easily acquire " a masterly skill in bullion
and coin," in my own country, in the United States of
America, in Germany and in France, to accomplish this.
"Within ten years of the subject being taught with geographyin the schools of the world and the issue of this primer, the
utmost astonishment would be expressed at the present all
but universal darkness which is over the subject and the gross
errors which flourish therein.
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